Suppose That Examination of a Pro Forma Reveals That the Fifth

question 27

Multiple Choice

Suppose that examination of a pro forma reveals that the fifth year net operating income (NOI) for an income producing property that you are analyzing is $138,446 (you can assume that this cash flow occurs at the end of the year) . If you estimate the projected rental growth rate for the property to be 5% per year, determine the projected sale price of the property at the end of year five if the going-out capitalization rate is 9%.

• A) $988,900.00
• B) $1,465,037.00
• C) $1,538,289.00
• D) $1,615,203.00

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Definitions:

Marginal Product

The supplementary production derived by adding one more unit of a particular input, with all else remaining constant.

Labor Hours

The amount of time workers spend on the job, often measured in hours per day, week, or year.

Returns to Scale

The speed at which production levels rise due to a corresponding rise in all contributing factors.

Labor Hours

The total hours of work put in by workers or employees during a specified period.