Homework Answers
5% is the correct answer
Lower the interest rate, higher the value of asset. Hence, in order to make the most money, the disposition cap has to be lower than the yield on cost and lower the better.
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QUESTION 13 Assume a real estate company pursues a develop-to-sell strategy. Its yield on cost is 7%. At the time of sa...
Assume a real estate company pursues a develop-to-sell strategy. Its yield on cost is 7%. At the time of sale, at what d...
Assume a real estate company pursues a develop-to-sell strategy. Its yield on cost is 7%. At the time of sale, at what dispostion cap rate will it make the most money?
The financial markets like predictability of cash flows. Hotels have the shortest leases of all major...
The financial markets like predictability of cash flows. Hotels have the shortest leases of all major property types and the leases can be as short as one day. This is why hotels are often thought of as operating businesses. Office leases, by contrast, are longer term and and it is not uncommon to find office leases with 10-year terms or longer. As a result, cap rates for hotels are generally higher than cap rates for office buildings? True False 5...
A real estate development company wants to issue a 10-year corporate bond worth € 10 million....
A real estate development company wants to issue a 10-year corporate bond worth € 10 million. The company has the following options: a) To make the issue of corporate bonds by public offering. In this case the bond will be sold at par, the yield is 8%, the cost of the contractor is 0.5% of the nominal value of the bond and we assume that there are no other costs associated with its issue. b) To make the issue of...
Question 1 (1 point) Quick Sale Real Estate Company is planning to invest in a new...
Question 1 (1 point) Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be $23 million and is expected to generate cash flows of $14,000,000 $11,750,000, and $6,350,000 over the next three years. The company's cost of capital is 20 percent. What is the internal rate of return on this project? (Round to the nearest percent.)
The total market value of the common stock of the Okefenokee Real Estate Company is $13...
The total market value of the common stock of the Okefenokee Real Estate Company is $13 million, and the total value of its debt is $8.2 million. The treasurer estimates that the beta of the stock is currently 1.7 and that the expected risk premium on the market is 8%. The Treasury bill rate is 3%. Assume for simplicity that Okefenokee debt is risk-free and the company does not pay tax. a. What is the required return on Okefenokee stock?...
Question 3 Not yet answered If a real estate company expends $100,000 to survey or study...
Question 3 Not yet answered If a real estate company expends $100,000 to survey or study a parcel of land to acquire for development and sale to third parties and it is determined that the property will not be acquired, what happens to the $100,000 spent? Points out of 2.00 P Flag question Select one: O a. The $100,000 is charged to expense when there is enough profit to absorb it. b. The $100,000 is charged to expense as soon...
A local real-estate company invests in retirement accounts for all full-time employees. The company automatically deposits...
A local real-estate company invests in retirement accounts for all full-time employees. The company automatically deposits an amount equal to 3% of the employee’s base salary into a 401K account through an investment firm. Employees of the company may choose to have a portion of their pay deposited into these accounts as well, but they are not required to do so. The company has access to the annual return rate data on all 254 of their employee’s accounts for the...
Multiple Choice Question 109 Sheridan Company is unsure of whether to sell its product assembled or assembled. The...
Multiple Choice Question 109 Sheridan Company is unsure of whether to sell its product assembled or assembled. The unit cost of the unassembled product is $24 and Shenden would sell it for $46. The cost to assemble the product is estimated at 59 per unit and the company believes the market would support a price of $54 on the assembled unit. What decision should Sheridan make? Process further, the company will be better off by 123 per unit Sell before...
I just need the last two parts of the question answered. PM.66 Real estate developer Russell Call was working with a fe...
I just need the last two parts of the question answered.
PM.66 Real estate developer Russell Call was working with a few contractors to make a number of improvements to one of his rental properties. After gathering information from these contractors he determined the following durations, predecessors, and costs of all the required activities Activity Normal Time (weeks) Crashed Time (weeks) Normal Cost Crashed Cost Predecessor(s) $1,050 $2,000 $2,560 $2,600 $1,300 $2,600 $2,200 $1,800 $2,400 4 $4,200 $5,540 $2,050 4...
Question 1 (1 point) Company A has an internal cost of capital of 7% annually. It...
Question 1 (1 point) Company A has an internal cost of capital of 7% annually. It is evaluating its investment options against its internal costs and has identified three potential investments: Investment A: Bond with annual returns of 8% Investment B: Bond with annual returns of 4% Investment C: Bond with annual returns of 12% Which of the above investments should the company consider taking on given its internal cost of capital? O A only C only A and C...
Question 1 (1 point) Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be $23 million and is expected to generate cash flows of $14,000,000 $11,750,000, and $6,350,000 over the next three years. The company's cost of capital is 20 percent. What is the internal rate of return on this project? (Round to the nearest percent.)
The total market value of the common stock of the Okefenokee Real Estate Company is $13 million, and the total value of its debt is $8.2 million. The treasurer estimates that the beta of the stock is currently 1.7 and that the expected risk premium on the market is 8%. The Treasury bill rate is 3%. Assume for simplicity that Okefenokee debt is risk-free and the company does not pay tax. a. What is the required return on Okefenokee stock?...
Question 3 Not yet answered If a real estate company expends $100,000 to survey or study a parcel of land to acquire for development and sale to third parties and it is determined that the property will not be acquired, what happens to the $100,000 spent? Points out of 2.00 P Flag question Select one: O a. The $100,000 is charged to expense when there is enough profit to absorb it. b. The $100,000 is charged to expense as soon...
Multiple Choice Question 109 Sheridan Company is unsure of whether to sell its product assembled or assembled. The unit cost of the unassembled product is $24 and Shenden would sell it for $46. The cost to assemble the product is estimated at 59 per unit and the company believes the market would support a price of $54 on the assembled unit. What decision should Sheridan make? Process further, the company will be better off by 123 per unit Sell before...
I just need the last two parts of the question answered.
PM.66 Real estate developer Russell Call was working with a few contractors to make a number of improvements to one of his rental properties. After gathering information from these contractors he determined the following durations, predecessors, and costs of all the required activities Activity Normal Time (weeks) Crashed Time (weeks) Normal Cost Crashed Cost Predecessor(s) $1,050 $2,000 $2,560 $2,600 $1,300 $2,600 $2,200 $1,800 $2,400 4 $4,200 $5,540 $2,050 4...
Question 1 (1 point) Company A has an internal cost of capital of 7% annually. It is evaluating its investment options against its internal costs and has identified three potential investments: Investment A: Bond with annual returns of 8% Investment B: Bond with annual returns of 4% Investment C: Bond with annual returns of 12% Which of the above investments should the company consider taking on given its internal cost of capital? O A only C only A and C...
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