A Property Produces a First-Year Net Operating Income of $24,000

question 13

Multiple Choice

A property produces a first-year net operating income of $24,000.Because of the long economic life of the building,the income is considered as a perpetuity that will grow by 2.5% per year.Using a discount rate of 9.5%,the property value is estimated at:

• A)$276,968
• B)$252,632
• C)$200,000
• D)$342,857

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Definitions:

Disney World Tickets

Specific passes required for admission to the Walt Disney World Resort, an entertainment complex in Florida.

Demand

The desire to own something coupled with the power to purchase it.

Attendance Falls

A decrease in the number of people present at an event, institution, or place compared to a previous period.

Complementary Products

Goods or services that are used together, where the use of one increases the value or demand for the other.