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A property is expected to have net operating income during the first year of $50,000,...

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Finance

A property is expected to have net operating income during the first year of $50,000, which is projected to increase at a rate of 4% p.a. over a five-year holding period. The property value is also projected to increase at a rate of 4% p.a. The valuer believes that a 14% discount rate is appropriate. What is the estimated value of the property? Assume rent is paid annually in arrears.

a. $184,054.
b. $292,150.
c. $357,143.
d. $500,000.

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