Consider an income producing property that according to your assumptionsand estimations is currently worth $4M on an unlevered basis when a 7.5% 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 $4.4M at that future point in time.

1. 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.

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

   value of the property. Show your calculations.

Consider an income producing property that according to your assumptions