Question

Question 8 10 pts An investor is considering the purchase of an office building for $3.2 million. If she sells the property at the end of 5 years for $3,751,200, what is her expected appreciation rate? 2.56% 2.84% 1.52% 3.23% 4.57% 10 pts Question 9 MacBook Pro

Answer 1

Purchase of an office building = $3,200,000

5 years later the price is = $3,751,200

Let Appreciation rate is 'R'

$3,200,000 * (1 + R)⁵ = $3,751,200

(1 + R)⁵ = 1.17225

Apply 'Log' on both sides

Log(1 + R)⁵ = Log(1.17225)

5 * Log(1+R) = 0.06902024

Log(1+R) = 0.013804048

Apply 'Antilog' on both sides

Antilog [log(1+R)] = Antilog(0.013804048)

(1 + R) = 1.0323

R = 0.0323

R = 3.23%

Expected Appreciation rate = 3.23%