If you know the price of a house, the monthly rent and the monthly rate of growth for this rent, how can you find the monthly discount rate used for computing the price?
We can use the below formula
Price now=Expected Monthly rent/(monthly disount rate-monthly growth rate)
If you know the price of a house, the monthly rent and the monthly rate of...
What is the price of a house which monthly rent is 2000 and annual discount rate is 10%. The monthly rate is estimated to increase at % 5% per year
Suppose you own a house where you live and a condo for rent. So the rent from the tenant of your condo is your income. The monthly rent is $1,500, but you have to pay taxes, maintenance fees, and insurance premium. They are $500 per month in total. Therefore, the net cash flow from this condo is $1000 per month. Assume the tax is a lump sum, not proportional to the value of a property. Assume there is no depreciation...
Refer to Table 3.1. Suppose that you have a house that you rent out. If you keep the lawn maintained, you can charge a higher monthly rent for the house. Suppose your hourly wage from your job at the mall is $10, what is the net benefit of spending 12 hours per week maintaining the lawn of the house? Hours Per Week Maintaining Lawn Benefit (Additional Monthly Rent) $0.00 $150.00 $260.00 $330.00 $390.00 $450.00 Table 3.1 O $120 O $210...
A family currently live in an apartment whose monthly rent is $950. They are thinking of buying a house which would cost $220,000. They plan to live in this house for 5 years and sell it at the end of the 5th year. They would put a downpayment of $20,000 and finance the balance through a mortgage at 3.5% interest rate. The mortgage is to be repaid in 5 annual installments (which include both principal and interest) at the end...
You buy an apartment for investment in a very good area so you know this will be most of the time with tenants. The monthly rent you charge to the tenants is $5,000. You set in the contract a rate of increase in the rent of 5% per year. What should be the price of the department today? Use a 10% annual discount rate.
Assume that the price of real estate is determined by P=PV(all cash flows generated by the real estate). After you have graduated you work for some years and can save some money. You decide to invest in a house which you want to rent out for a rate of SEK 8,000 per month. Assume that the rental rate will increase with 1.2% per year (which is 0.1% per month). (For the sake of simplicity, also assume that there are no...
1. You will receive $100 per year for 10 years. The discount rate is 10%. What is the present value of this stream? 2. Using the previous information, assume now the 100 will increase at a 5% per year from year 1. What is the new present value? 3. Now assume compute the present value for the same information using a perpetuity without and with growth. Compare the 4 present values. What would you rank those? 4. You look at...
You are thinking of renovating a basement apartment beneath your house, which you currently rent out for $529 per month. If you renovate the apartment, you could get $721 per month instead, starting next month. Assume renovations would cost $10,000, paid immediately, and would take very little time to complete so there’d be no delay in rental income. Assume monthly rental income would last for the foreseeable future (aka forever). If the applicable discount rate is 5% per year, what...
A house which you could rent for $10 a year and sell for $110 a year from now. can be purchased for $100 what is the rate of return on this house?
You want to buy a house that costs $280,000. You will make a down payment equal to 15 percent of the price of the house and finance the remainder with a loan that has an interest rate of 5.47 percent compounded monthly. If the loan is for 25 years, what are your monthly mortgage payments?