A newly built business property, containing a space for a store and two offices, can be purchased for $1,200,000. A pros
Posted: Thu Apr 28, 2022 11:39 am
A newly built business property, containing a space for a store
and two offices, can be purchased for $1,200,000. A prospective
buyer estimates that during the next 10 years he can obtain annual
rentals of at least $458,460 from the property, and the annual
out-of-pocket expenditure will not exceed $60,000. He believes that
he should be able to dispose of the property at the end of 10 years
at not less than $700,000. Annual taxes and insurance will total
2.5% of the first cost. Assume he has sufficient capital to
purchase the property, and that the minimum attractive return
(MARR) he is obtaining from his capital is 20%.
What is the Rate of Return of the Investment (in %)?
and two offices, can be purchased for $1,200,000. A prospective
buyer estimates that during the next 10 years he can obtain annual
rentals of at least $458,460 from the property, and the annual
out-of-pocket expenditure will not exceed $60,000. He believes that
he should be able to dispose of the property at the end of 10 years
at not less than $700,000. Annual taxes and insurance will total
2.5% of the first cost. Assume he has sufficient capital to
purchase the property, and that the minimum attractive return
(MARR) he is obtaining from his capital is 20%.
What is the Rate of Return of the Investment (in %)?