Suppose That a Property Owner Plans on Spending $15,000 Per

question 2

Multiple Choice

Suppose that a property owner plans on spending $15,000 per year over the next 5 years on maintenance and repairs.However,if she does not spend this amount,she will not be able to keep rents at market levels,vacancies will increase,and the resale value of the property in 5 years will be lower.Assume that she would lose about $7,000 a year in net income and would realize a loss of $85,000 in lower property value at the time of sale if maintenance is not maintained on the property.Determine the difference between the present value of the cost of maintaining the property and the loss to the owner if the property is not maintained assuming
That the owner could earn a 7 percent return on any funds not invested in maintenance and repairs?

• A)The present value of the maintenance costs is $27,802 less than the present value of the averted loss
• B)The present value of the maintenance costs is $27,802 greater than the present value of the averted loss
• C)The present value of the maintenance costs is $32,802 less than the present value of the averted loss
• D)The present value of the maintenance costs is $32,802 greater than the present value of the averted loss

---

Definitions:

Confidence Interval

A sweep of values, pulled from statistical evaluations of samples, likely to carry the value of a hidden population parameter.

Finite Population

A population set with a limited number of elements or members, making it possible to enumerate its elements.

Sample Size

The total count of individual pieces of data used in a statistical analysis, reflecting the amount of information included in the study.

Confidence Limits

The upper and lower bounds of a confidence interval, typically set around a sample statistic, defining the range within which the true population parameter is expected to lie with a specified level of confidence.