For questions 15-17 refer to the following: Formulate a proforma statement given the following (pick the closest answer):

• First year PGI of an office building $50,000 and increases by 4% annually.
• The vacancy and collection is 2% of PGI
• The operating expense is 40% of EGI for every year.
• Let us assume that the holding period for comparable properties is 3 years.

Data for five comparable income properties that sold recently are shown in the accompanying table.

Property NOI Sale Price Overall Rate

A AA $57,800 $566,600 0.1020

B $49,200 $496,900 0.0990

C 63,000 $630,000 0.1000

D $56,000 $538,500 0.1040

E $58,500 $600,000 0.0975

What is the indicated cap rate R0.? A. 50.05%

• B. 12.05%
• C. 0.05%
• D. -10.05%
• E. 10.05%

16. Calculate the selling price (terminal value) of the property at the end of three years (holding period) using the Cap Rate that you calculated above in the previous question.

• A. 429052.6 approx..
• B. $329065 approx..
• C. 29052.6 approx..
• D. 129052.6 approx..
• E. 1329052.6 approx. .

17. What is the market value of the property at a discount rate of 8%?

• A. 339,900 approx..
• B. 892 approx..
• C. $389,892 approx..
• D. 839,892 approx..
• E. 9,892 approx. .