M http://ezto -clMChapter 13 Homework- om/hm.tp 1Mlectures.rnlhe com View Favorites Tools Help value 15.00 points Ben Ryatt, professor of languages at a southern university, owns a small office building adjacent to the university campus. He acquired the property 12 years ago at a total cost of $610,000 $56,000 for the land and $554,000 for the building. He has just received an offer from a realty company that wants to purchase the property, however, the property has been a good source of inc unsure whether he should keep it or sell it. His alternatives are however, the property has been a good source of income over the years, so Professor Ryatt is Keep the property. Professor Ryatt's acountant has kept careful records of the income realized from the property over the past 9 years. These records indicate the following annual revenues and expenses Rental receipts Less building expenses: $157,000 Utilities Depreciation of building Property taxes and insurance Repairs and maintenance Custodial help and supplies s 28,600 18,100 19,700 10,600 43,600 120,600 Net operating income S 36,400 Professor Ryatt makes a $12,600 mortgage payment each year on the property The mortgage will be paid off in 9 more years. He has been depreciating the building by the straight-line method, assuming a salvage value of $9,100 for the building, which he still thinks is an appropriate figure. He feels sure that the building can be rented for another 15 years. He also feels sure that 15 years from now the land will be worth 1.62 times what he paid for it. building by theerty The Sell the property. A realty c and $18,000 per year for the next 15 years Control of the property would go to the realty company by making a lumpsum, Payment of S45 000 taxes.) Professor Ryatt requires a 14% rate of return (Ignore income Cick here to view Exhibit 118-1 and Exhibit 11B:2 to determine the appropriate discount factorts) using tables