An investment group is considering the purchase of a 35,000 square foot shopping center for $5

million. The property rents for $22 per foot, with an annual increase of 5%. Expected vacancy is

10%, and expected operating expenses are 30%. The anticipated holding period is 5 years.

Assume that the property could be sold at a 10% cap rate with sales expenses of 5%.

1-What is the appreciation rate?

PP = 5,000,000 = PV

SP = 619,124 / 0.10 = 6,191,242 = FV

N = 5; CPT I = 4.37%

How get to the value 619,124? And how get 309,562 for the sales expense?