Consider an income producing property that according to your assumptions

and estimations is currently worth $$4$M on an unlevered basis when a $7\mathrm{.}5\%$ required rate

of return is applied. One of the assumptions that you have made when arriving at that

estimate is that you will sell the property in $6$ years for a CAP of $8\%,$ which translates to

$$4\mathrm{.}4$M at that future point in time.

a$.$ At what price will you sell the property in $6$ years if all your assumptions materialized

except that you will sell the property for a CAP of $7\%$ instead of $8\%?$ Show your

calculations.

b$.$ All other things equal, by how much the situation described in part a affects the current

value of the property. Show your calculations.