Calculate the value of the fee simple estate assuming a 13


Given the following inforamtion, calculate the value of the fee simple estate assuming a 13% discount rate and a 5 year holding period are appropriate:

market rent: $500,000 increasing 3% per year

contract rent: $400,000 level

operating expenses: 50% of gross income

resale value: $3,000,000

a. $2,367,937

b. $2,55,261

c. $3,469,679

d. $2,887,445

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Financial Management: Calculate the value of the fee simple estate assuming a 13
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