Use the information provided below to estimate the market value of the office building that has been described. Type of Property: Office Building
Leasable Space: 100,000 square feet
Average Rent: $20.00 per square foot per year
Expected Rent Growth: 4.50% per year
Vacancy and Collection Losses: 15.00% of potential gross income
Other Income: $1.50 per square foot per year
Expected Growth in Other Income: 3.00% per year
Operating Expenses: 27.50% of effective gross income
Capital Expenditures: 2.50% of effective gross income
Going-In Cap Rate: 5.50%
Going-Out Cap Rate: 6.25%
Selling Expenses: 4.00% of future selling price
Discount Rate: 6.75%
a. What is the market value of this property according to the direct capitalization approach?
i. Estimate the NOI for year 1.
ii. Use the appropriate cap rate.
b. What is the market value of this property according to the discounted cash flow approach? Assume that you are going to sell the property at the end of the 5th year of ownership.
i. Estimate the NOI for the holding period (each year individually).
ii. Estimate the terminal value. iii. Use the appropriate discount rate to arrive at the NPV.

Daniel owns 100 shares of abc corporation's common stock. abc uses the fair value option, and recent declines in the firm's credit rating have caused the value of the firm's outstanding bonds payable to drop by 10%. daniel feels this is good news, but he wants to know what you think about the situation. which of the following represents your best response? a : "this situation may be positive for you in that the change in abc's credit standing indicates that the value of the firm's assets is likely increasing. however, the drop in bond value may negate any positive effects on your bottom line, because it means your claim on the firm's assets is simultaneously decreasing." b : "actually, this is bad news all around. the drop in the value of abc's bonds payable means shareholders' claims on the firm's assets have decreased. moreover, abc's declining credit rating means that the firm's assets are probably also dropping in value, thus magnifying your losses even more." c : "on the surface, this seems like good news because it means your claim on the firm's assets has increased. however, the drop in creditworthiness may also indicate that abc's assets are declining in value, thus offsetting any gains associated with the drop in bonds payable." d : "you're right! this is good news because it means that abc's debtholders have a decreased claim on the firm's assets. as a result, the firm's existing shareholders"like you"have seen their claim on the firm's assets increase."

The owner of firewood to go is considering buying a hydraulic wood splitter which sells for $50,000. he figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. if, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is expected to be 32 cords per day, what would be its efficiency?

Quick calculate the roi dollar amount and percentage for these example investments. a. you invest $50 in a government bond that says you can redeem it a year later for $55. use the instructions in lesson 3 to calculate the roi dollar amount and percentage. (3.0 points) tip: subtract the initial investment from the total return to get the roi dollar amount. then divide the roi dollar amount by the initial investment, and multiply that number by 100 to get the percentage. b. you invest $200 in stocks and sell them one year later for $230. use the instructions in lesson 3 to calculate the roi dollar amount and percentage. (3.0 points) tip: subtract the initial investment from the total return to get the roi dollar amount. then divide the roi dollar amount by the initial investment, and multiply that number by 100 to get the percentage.