An appraiser is estimating the highest and best use of a


An appraiser is estimating the highest and best use of a vacant site. One of the alternatives being considered as a use for the site is a building that would cost $1 million to construct the improvements. Under this use, NOI is estimated to be $120,000 per year. Assume that an appropriate building capitalization rate (RB) is 10 percent and an appropriate land capitalization rate is 8 percent. What is the estimated residual value of the land under this use? What is the total property value?

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Financial Management: An appraiser is estimating the highest and best use of a
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