Lim Bon Fing Y Hermanos Inc has offered for sale its two-storey building in the commercial district of Cebu City. The building contains two stores on the ground floor and a number of offices on the second floor. A prospective buyer estimates that if he buys this property, he will hold it for about 10 years. He estimates that the average receipts from the rental during this period to be P350,000.00 and the average expenses for all purpose in connection with its ownership
Lim Bon Fing Y Hermanos Inc has offered for sale its two-storey building in the
commercial district of Cebu City. The building contains two stores on the ground floor and
a number of offices on the second floor.
A prospective buyer estimates that if he buys this property, he will hold it for about 10
years. He estimates that the average receipts from the rental during this period to be
P350,000.00 and the average expenses for all purpose in connection with its ownership
and operation (maintenance and repairs, janitorial services, insurance, etc.) to be
P135,000.00. He believes that the property can be sold for a net of P2,000,000 at the end
of the 10th year. If the
cash price of this property for the buyer to recover his investment with a 7% return before
income taxes.
ANSWER: P2,526,768.61
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