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A building is appraised at NOK 3 million (Norwegian Krona). This estimate is based on a forecast of net rent of NOK 150,000 per year
A building is appraised at NOK 3 million (Norwegian Krona). This estimate is based on a forecast of net rent of NOK 150,000 per year discounted at 5% [PV =150,000/0.05= 3,000,000 ]. The rent is net (or after) repair and maintenance costs and taxes and paid at the beginning of the rental period. Suppose the building is currently in disrepair and it takes one year and NOK 288,000 to bring it into rentable condition. How much would you be willing to pay for the building today? Assume that the repair bill is paid at the end of the year. A. NOK 2,712,000.00 B. NOK 2,725,714.29 C. NOK 3,000,000.00 D. NOK 2,582,857.14
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