1. All other factors being equal, a company would prefer to own rather than lease under which of the following conditions?

The expected life of an asset far exceeds the company's projected period of use

The real estate investment represents a large proportion of the company's total capital

The corporation needs a specialized research and development building

The corporate needs for the property are not highly sensitive to the level of maintenance

2. A REIT has expected total return on equity of 15%, interest on their debt is 9%, and their debt-to-total-value ratio is 50%. What is the REITs average cost of capital?

12.0%

12.2%

10.4%

12.6%