Question

And investment property produces 175,150 annual gross income if the annual expenses are 24,600 and the appraiser estimates the value of the building using 5.25% rate of return what is the estimated value

Answer 1

Answer:

$962,857

Explanation:

The Dividend Valuation Model with no growth increment can be used here to calculate the value of the building and is given as under:

Po = D / r

Here

Po is value of building

D is Net Annual Cash flow

r is the rate of return

By putting the values we have:

Po = (75,150 - 24600) / 5.25%  = $962,857