advantage (disadvantage) of renting out the building?
Q: What are the major advantages of leasing a fixed asset rather than purchasing it?
A: A lease can be defined as an arrangement between the lessor(owner of the asset) and the lessee (user…
Q: Explain the ways in which property owners can structure leases in order to recover operating…
A: Leasing refers to acquiring an asset from a lessor in lieu of rental payments.
Q: 2. Which of the following costs would most likely be a discretionary fixed cost? A. The rent of the…
A: The correct option is D that is, Advertising. Discretionary fixed costs are such costs which are…
Q: What are the benefits and costs of renovation?
A: Introduction: Renovation is the improvement process in which upgrades and repair of the property are…
Q: When considering an investment in “distressed’’ properties, what are the two most important areas of…
A: It implies residential real property comprising of from one to four dwelling units, at any rate one…
Q: Why should investors be concerned about market rents if they are purchasing a property subject to…
A: Lease is an agreement by which one party agrees to use the property such as land or building of…
Q: What is the significance of the passive activity loss limitation (PAL) rules for real estate…
A: Significance of the passive activity loss limitation (PAL) rule for real estate investors: The…
Q: What are the features of Rent discount for industrial/warehouse properties that might be added for…
A: The question is based on the concept of rent discounting for real estate.
Q: Which Sources of Data Used for Real Estate Performance Measurement?
A: Measurement of real estate performance is very important as investors make investment in real estate…
Q: Residential rental property is rental property where at least what percentage of the income comes…
A: Residential rental property: Residential rental property refers to homes that are purchased by an…
Q: when evaluating a tenant and a lease proposal, the owner considers it?
A: Lease is an agreement where landlord and tenant agrees to certain terms and conditions. In this…
Q: Are tax considerations important in renovation decisions?
A: Introduction: An income property can be well-defined as the property that has been acquired or…
Q: Which are the effects of Tenant Improvements and Free Rents on FFO?
A: FFO stands for Funds From Operations. The amount that is derived and used by real estate investment…
Q: Which movable assets those are not considered as leasehold improvements?
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…
Q: Describe the process of securitization as applied to homemortgages.
A: Securitization is a method in which funds are recycled in a way that all assets generating steady…
Q: What are the features of Rent premiums for industrial/warehouse properties that might be added for…
A: Introduction: The given question is based on the notion of rent discounting in real estate finance.…
Q: An increase in the value of a home is called?
A: The value of an asset can both increase as well as decrease
Q: il, and warehouse properties.
A: SOLUTION:- Common area is the area which benefits all the tenants. The property owners have to pay…
Q: What is meant by “loss to lease”? Explain?
A: Loss to lease: It is the term used in Real Estate in leasing of property mainly apartment complexes,…
Q: Explain how risk-return trade-off works in relation to residential and commercial property…
A: The rate of return is the change in the price of an asset, investment, or project over time and can…
Q: Discuss the residual value of the leased asset. How does it impact the PV of rental payments…
A: Lease means a type of agreement in which one party gives its valuable assets to other party for a…
Q: Investment property is most likely to:A. earn rent.B. be held for resale.C. be used in the…
A: An investment is an allocation of money in some financial securities, properties, etc. in the…
Q: Which of the following is not a fixed cost?a. Direct materialsb. Depreciationc. Lease charged.…
A: Fixed cost is the cost which will be borne by the company irrespective of the units produced.
Q: What are the general desirability among users to lease rather than own the space they need in their…
A: Leasing is a method through which person can hire fixed asset or place for certain period of time by…
Q: The cost of a title search and title insurance are typically part of the closing costs on a housing…
A: close costing: it is the expense beyond the cost of property when you close on house.
Q: Rent on the Administrative building would be? DM O DL O MOH O eling & Administrative
A: Part 1: Selling and administrative.
Q: What is eviction?
A: Eviction as per law is the process of civil nature in which court allows landlord to legally remove…
Q: What is leasing? Explain the process of leasing’s Underwriting process of Tenants.
A: Lease can be defined as a right to use equipment or capital goods on payment of periodical amount…
Q: Differentiate the following investments by determining its advantage or disadvantage. House and Lot…
A: Investment decisions should be done by analyzing the investment cost and returns expected in the…
Q: How does Leasing offer flexibility and a lower cost when disposing of the asset?
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…
Q: How can I own commercial property without having to manage the building and tenants?
A: By investing in real estate through different ways mentioned here under to can own commercial…
Q: Which of these is not typically a responsibility of a property manager? Maintenance programs O…
A: Property manager is the person who sees the day to day working of the real estate.The responsibility…
Q: Does the location of a house impact the cost of a home? Explain why? Give examples
A: The value of a home is dependent on what the buyers who are willing to buy are ready to pay for it,…
Q: correct cost of the building?
A: In this case, company have to recognize 3 fixed asset:- Land Building Equipment
Q: What are the main benefits and drawbacks of renting a place of residence
A: Renting a place of residence should be done when the ownership is in the hands of the owner of that…
Q: What is the Importance of the Residual Value of Real Estate?
A: RESIDUAL TECHNIQUE IN REAL ESTATE- Residual techniques in business land valuation square measure…
Q: Which are Non residential properties?
A: Fixed assets are the long-term fixed assets purchased by the firm to increase the productivity of…
Q: Which of the following is not a characteristics of an investment property? a. land and/or…
A: Investment Property are accounted as per the guidance provided under IAS 40, Investment Property.
Q: When using the Comparison Method of Valuation to estimate the current market rent of a house, which…
A: Property valuation is the governmental process being conducted when the property need to be sold,…
Q: Under what conditions might a property with an assumable loan sell for more than comparable…
A: Property along with the assumable loan is expected to be sold for more than the comparable property…
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- Novo, Inc., wants to develop an activity flexible budget for the activity of moving materials. Novo uses eight forklifts to move materials from receiving to stores. The forklifts are also used to move materials from stores to the production area. The forklifts are obtained through an operating lease that costs 18,000 per year per forklift. Novo employs 25 forklift operators who receive an average salary of 50,000 per year, including benefits. Each move requires the use of a crate. The crates are used to store the parts and are emptied only when used in production. Crates are disposed of after one cycle (two moves), where a cycle is defined as a move from receiving to stores to production. Each crate costs 1.80. Fuel for a forklift costs 3.60 per gallon. A gallon of gas is used every 20 moves. Forklifts can make three moves per hour and are available for 280 days per year, 24 hours per day (the remaining time is downtime for various reasons). Each operator works 40 hours per week and 50 weeks per year. Required: 1. Prepare a flexible budget for the activity of moving materials, using the number of cycles as the activity driver. 2. Calculate the activity capacity for moving materials. Suppose Novo works at 80 percent of activity capacity and incurs the following costs: Prepare the budget for the 80 percent level and then prepare a performance report for the moving materials activity. 3. Calculate and interpret the volume variance for moving materials. 4. Suppose that a redesign of the plant layout reduces the demand for moving materials to one-third of the original capacity. What would be the budget formula for this new activity level? What is the budgeted cost for this new activity level? Has activity performance improved? How does this activity performance evaluation differ from that described in Requirement 2? Explain.Foy Company has a welding activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity: Four welding units, with a lease cost of 12,000 per year per unit Six welding employees each paid a salary of 50,000 per year (A total of 9,000 welding hours are supplied by the six workers.) Welding supplies: 300 per job Welding hours: Three hours used per job During the year, the activity operated at 90 percent of capacity and incurred the actual activity and resource costs, shown on page 676. Lease cost: 48,000 Salaries: 315,000 Parts and supplies: 805,000 Required: 1. Prepare a flexible budget formula for the welding activity using welding hours as the driver. 2. Prepare a performance report for the welding activity. 3. What if welders were hired through outsourcing and paid 30 per hour (the welding equipment is provided by Foy)? Repeat Requirement 1 for the outsourcing case.A company is spending 70,000 per year for inspecting, 60,000 per year for purchasing, and 56,000 per year for reworking products. What is a good estimate of non-value-added costs? a. 126,000 b. 70,000 c. 56,000 d. 130,000
- Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $17 million, and production and sales will require an initial $5 million investment in net operating working capital. The company’s tax rate is 25%. What is the initial investment outlay? The company spent and expensed $150,000 on research related to the new product last year. What is the initial investment outlay? Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for $1.5 million after taxes and real estate commissions. What is the initial investment outlay?Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be 800,000 per year. The system costs 4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? 2. Sterling Wetzel has just invested 270,000 in a restaurant specializing in German food. He expects to receive 43,470 per year for the next eight years. His cost of capital is 5.5 percent. Compute the internal rate of return. Did Sterling make a good decision?
- Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects sales of 15.9 million and cost of goods sold of 8.75 million. Advertising is a key part of Coral Seas business strategy, and total marketing expense for the year is budgeted at 2.8 million. Total administrative expenses are expected to be 675,000. Coral Seas has no interest expense. Income taxes are paid at the rate of 40 percent of operating income. Required: 1. Construct a budgeted income statement for Coral Seas Jewelry Company for the coming year. 2. What if Coral Seas had interest payments of 500,000 during the year? What effect would that have on operating income? On income before taxes? On net income?Talbot Industries is considering launching a new product. The new manufacturing equipment will cost 17 million, and production and sales will require an initial 5 million investment in net operating working capital. The companys tax rate is 40%. a. What is the initial investment outlay? b. The company spent and expensed 150,000 on research related to the new product last year. Would this change your answer? Explain. c. Rather than build a new manufacturing facility, the company plans to install the equipment in a building it owns but is not now using. The building could be sold for 1.5 million after taxes and real estate commissions. How would this affect your answer?Pasti Berhad values, advertises and sells residential property on behalf of its customers. The companyhas been in business for only a short time and is preparing a cash budget for the first four months ofyear 2020. Expected sales of residential properties are as follows.Year 2019 2020 2020 2020 2020Month December January February March AprilUnits sold 10 10 15 25 30The average price of each property is RM180,000 and Pasti Berhad charges a fee of 3% of the valueof each property sold. Pasti Berhad receives 1% in the month of sale and the remaining 2% in themonth after sale. The company has ten employees who are paid monthly. The average salary peremployee is RM36,000 per year. If more than 20 properties are sold in each month, each employeewill be paid in that month a bonus of RM1,500 for each additional property sold.Variable expenses are incurred at the rate of 50% of the value of each property sold and theseexpenses are paid in the month of sale. Fixed overheads of RM44,300 per month…
- A Corporation is considering to open an office in a new market area that would allow it to increase its annual sales by $1.8 million. Cost of goods sold is estimated to be 30 percent of the annual sales, and corporate overhead would be expected to increase by $180,000 not including the cost of either acquiring or leasing office space. The Corporation will also have to invest $1.5 million in office furniture, office equipment, and other up-front costs associated with opening the new office before considering the costs of owning or leasing the office space. A small office building could be purchased for its sole use by the corporation at a total price of $2.5 million, of which $500,000 is estimated for land value, and $2 million for its building value. The cost of the building would be depreciated over 30 years. The corporation is in a 30 percent tax bracket. An investor is willing to purchase the same building and lease it to the corporation for $200,000 per year for a term of 5 years,…The engineering team at Manuel’s Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs $380,000 initially and is expected to increase revenue $125,000 per year every year. The software and installation from Vendor B costs $280,000 and is expected to increase revenue $95,000 per year. Manuel’s uses a 4-year planning horizon and a 10% per year MARR. What is the annual worth of each investment?Vendor A: $enter a dollar amount rounded to the nearest dollar Vendor B: $enter a dollar amount rounded to the nearest dollarA gym owner is considering opening a location on the other side of town. The new facility will cost $1.38 million and will be depreciated on a straight-line basis over a 20-year period. The new gym is expected to generate $541,000 in annual sales. Variable costs are 52 percent of sales, the annual fixed costs are $86,900, and the tax rate is 34 percent. What is the operating cash flow?