FREE RESPONSE QUESTIONS. Answer the questions exactly as directed.

1. You want to estimate the value of a property at time t = 0 (V0) using the income approach to valuation. Consider a property with a 2-year useful life, a cashflow generated by the property of $6,000 per year, and a required rate of return (opportunity cost, discount rate) of 5 percent. The payout (cash flow) comes at the end of the year (thus, you would discount the first year of cash flow). What is V0? Enter a whole number with no $, commas, or decimal places. For example, if your answer were $1,442.23, you would enter 1442.

2. You wish to estimate the value (V) of an existing building using the cost approach. Suppose the cost of constructing a new, identical building is $350,000. Suppose further that, due to depreciation, you apply an adjustment factor of 0.2. What is your estimate of V? Enter a whole number with no $, commas, or decimal places. For example, if your answer were $1,442.23, you would enter 1442