Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Question
Chapter 13, Problem 10FPE
a)
Summary Introduction
To discuss: Whether Person X likes to invest in real estate or to invest in REIT.
b)
Summary Introduction
To discuss: If Person X decides to invest directly will he invest in speculative property or income-producing property.
c)
Summary Introduction
To discuss: The non-financial and financial goals before starting the research for the appropriate property.
d)
Summary Introduction
To discuss: The types of securities Person X can buy if he decides to invest in real estate.
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Assume that you’ve just inherited $100,000 and wish to use all or part of it to make a real estate investment.
Would you invest directly in real estate, or indirectly through something like a REIT? Explain.
Assuming that you decided to invest directly, would you invest in income-producing property or speculative property? Why? Describe the key characteristics of the types of income producing or speculative property you would seek.
What financial and nonfinancial goals would you establish before beginning the search for suitable property?
If you decide to invest in real estate indirectly, which type(s) of securities would you buy, and why?
Assume Louise has inherited a large sum of money and wish to use it to make a real estate investment. She is a working professional in her late 30s.
a. Would you recommend her to invest in income property or speculative property? Why? Describe the key characteristics of the income or speculative property on which she would focus her search.
b. Louise has studied economics and knows about demand and supply, yet she doesn’t understand how to apply them to an investment analysis. Advise Louise in a practical way, how she might incorporate demand and supply into an investment analysis of property investment?
Investment in Real Estate is a longterm investment which affect the cash flows position of the entity either positively or negatively. Required
a). Discuss the above statement in the context of Real Estate Investment
b). How can a Real Estate owner make provisions for value decline in the asset and what causes value decline
c). Suppose the price of a house in year zero now is $5 million and the price of the house in one year's time will be $5.6 million. Calculate the expected rate of appreciation in the price of the house
Chapter 13 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
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