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Blababa [14]
2 years ago
10

An investor is looking at a four-plex that is priced at $500,000 and has a 7% cap rate. The investor told the sales associate to

write up the offer using a 9% cap rate. To the nearest dollar, what is the investor willing to pay?
Business
2 answers:
Hoochie [10]2 years ago
6 0

Answer:

$388,889

Explanation:

Net operating income (NOI)= value priced × priced cap rate

=$500,000× 7%

=$500,000×0.07

=$35,000

Current capital value= NOI/capitalization rate

=$35,000/9%

=$35,000/0.09

=$388,888.888888

To the nearest dollar

=$388,889

koban [17]2 years ago
3 0

Answer:

$388,889

Explanation:

$500,000 X .07 = $350,000

NOI = rate X value.

Therefore NOI is divided by the desired Cap rate

$350,000/.09 =$388,889

Therefore the investor is willing to pay $388,889

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The unusual types of ingredients Vosges uses, as described in the video, are part of which elementof the four Ps?
Inga [223]

Answer:

B. product

Explanation: the unusual ingredients are part of the product.

6 0
2 years ago
Henry Hacker, a professional golfer who was having trouble with his driver, decided to skip the next two tournaments on the PGA
goblinko [34]

Answer:

The earnings foregone by skipping the two tournaments on the PGA tour is cost of opportunity

Explanation: The cost of opportunity of an economic decision that has several alternatives is the value of the best unrealized option. In other words, it refers to what a business stops earning, when choosing an alternative among several available. In this case are the prizes the golf player lost for not playing the tournments.

5 0
2 years ago
Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value o
rusak2 [61]

Answer:

D. The market value of the bond approaches its par value as the time to maturity declines. The yield to maturity approaches the coupon interest rate as the time to maturity declines.

Explanation:

One explanation of the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond, is that <u>the market value of the bond approaches its par value as the time to maturity declines. The yield to maturity approaches the coupon interest rate as the time to maturity declines.</u>

According to the definition of yield to maturity, it takes into consideration the coupon rate (i.e. the interest amount earned per year) for the number of years left to maturity, it is often higher because it treats the amount earned each year as being re-invested.

<u>Therefore the amount of yield to maturity will fall as the time to maturity nears and will approach the coupon rate</u>

Secondly, A bond's par value is the dollar amount it will be worth when it reaches maturity.

Before its maturity date, the bond may sell for more than par value on the secondary market as the yield it pays becomes more attractive to buyers.

<u>Therefore the difference between par value and market value is the yield. hence as maturity nears, yield to maturity falls and market value approaches par value because the bond is what its par upon maturity.</u>

5 0
2 years ago
Read 2 more answers
Which of the following questions is inappropriate on an internal control questionnaire concerning purchase transactions?
defon

The question that is in appropriate is that are intact cash receipts deposited daily in the bank?

Explanation:

In a company before performing the audit the document that is provided to the employers of the company before the audit is the internal control questionnaire

Intact cash receipts can be deposited daily in the bank and there will be major need for a company to deposit the money in the bank and hence this question is inappropriate

4 0
2 years ago
International Imports (I2) pays an annual dividend rate of 10.40% on its preferred stock that currently returns 13.94% and has a
skelet666 [1.2K]

Answer:

$74.61 per share , decrease.

Explanation:

First calculate value of preferred share if return is  13.94% ;

Value of preferred share =(Annual dividend rate  * Par value)/ Rate of return

Value = (0.1040* 100)/0.1394

Value = 10.40/ 0.1394

Value = $74.61

Next, calculate value of preferred share if return is  18.12% ;

Value of preferred share =(Annual dividend rate  * Par value)/ Rate of return

Value = (0.1040* 100)/0.1812

Value = 10.40/ 0.1812

Value = $57.40

Since the value has gone from $74.61 to $57.40, it means that the value will DECREASE.

3 0
2 years ago
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