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Question
| If sold today | If sold next year | |
| Sale price | $2,500,000 | $2,650,000 |
| Mortgage balance | 1,000,000 | 900,000 |
| Capital gain tax | 112,500 | 135,000 |
| Cash flow | $1,387,500 | $1,615,000 |
| NOI over next year | $50,000 |
Consider the information in the table above. What is the marginal rate of return for keeping the property one additional year?
(a) 16.4%
(b) 20.0%
(c) $50,000
(d) $277,500
Answer
This answer is hidden. It contains 1 characters.
Related questions
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A REIT has an NOI of $15 as share and currently pays a dividend of $10 a share. The dividend is projected to increase by 4percent by next year and continue to increase by 4percent per year thereafter. Assuming that the blended cap rate is 9.75percent and the required rate of return is 10.5percent, what value would the Gordon Dividend Discount Model provide?
(a) $60.15
(b) $71.89
(c) $153.85
(d) $160.00
(e) $190.00
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