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aprsr
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DCF and Reversion Problem Help

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HP12c

A property is encumbered by a ten-year lease. Based on the following data, what is the present value of the leased fee interest?


Net operating income: $24,000 in Year 1; increasing $1,000 per year
Projection period: 5 years
Property value change: 3% per year increase (compounded)
Yield rate: 10%

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Jan_D
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The problem seems unlogical to me.

 

The first sentence speaks about a lease, so I expect periodic payments.

 

Later on though, there is information about a periodic income.

 

I can not reconcile this, in my view contradictory, information with each other.

 

 

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