Presented with the following information:
A building purchased has 32,000 ft sq and a capitalization rate of 9.3
for a cap rate of 9% the following square feet have the fair value of:
30,000 : $1,550,000
40,000 : $2,000,000
for a cap rate of 10% the following square feet have the fair value of:
30,000 : $1,400,000
40,000 : $1,800,000
The question asks what is the fair value of the building purchased?
Since 2,000 is 20% of the difference between 30,000 and 40,000 I know that if the Cap Rate was 9% the following Fair Value would be true:
$1,640,000 = 1,550,000 + .2 * ( 2,000,000 - 1,550,000 )
However I have no idea how to handle this problem at 9.3%. I have tried to reduce the values by their respective .3 percent differences between 9% and 10% but this does not seem to be what I am supposed to be doing.
Any help is appreciated.
A building purchased has 32,000 ft sq and a capitalization rate of 9.3
for a cap rate of 9% the following square feet have the fair value of:
30,000 : $1,550,000
40,000 : $2,000,000
for a cap rate of 10% the following square feet have the fair value of:
30,000 : $1,400,000
40,000 : $1,800,000
The question asks what is the fair value of the building purchased?
Since 2,000 is 20% of the difference between 30,000 and 40,000 I know that if the Cap Rate was 9% the following Fair Value would be true:
$1,640,000 = 1,550,000 + .2 * ( 2,000,000 - 1,550,000 )
However I have no idea how to handle this problem at 9.3%. I have tried to reduce the values by their respective .3 percent differences between 9% and 10% but this does not seem to be what I am supposed to be doing.
Any help is appreciated.