Exam Questions

All questions are equally weighted

1.In class, we discussed the formulas for the present value of a perpetuity (aka: no-growth perpetuity) and the present value of an ordinary annuity (aka: finite series of cash flows):

(I)

(II)

With and .We know that converges to as n approaches.Create a numerical example to show that this is so and explain the relevance of this convergence with respect to the estimation of income property valuation.

1. For this question, you are to explain and develop an example of how to value an income producing property that has no-growth in its NOI.
2. For this question, you are to explain and develop an example of how to perform a sales comparison appraisal for residential property.
3. Develop an example of how to estimate: (a) Seller's NET, (b) Selling Price (SP) necessary to provide a certain net, and (c) Buyer's Total Investment (TI).Also, explain what sellers and buyers are really negotiating over.