Consider the following information on condominium units used as rental property:
-the interest rate is 6 percent
-the market value of a typical units is $100,000
-the cost of maintaining a unit is 1 percent of the market value
-an unmaintained unit depreciates at a rate of 3 percent per year
-the city levies property taxes at a rate of 1 percent of the market value
-public schools cost $1000 per student
-the cap rate is expected to fall from 10 percent to 8 percent during the year
Ignore income taxes.
what is the user cost of owing a unit? if the government decided to impose a 50 percent "speculation tax" on capital gains, what would be the effect on the user cost for one year?