Question

In a real state market where you have the average price of the houses, the average growth rates for the rents, and the average monthly rent charged by tenants, how can you estimate the average discount rate used in that matket to determine houses’ price? Explain

Answer #1

The Avarage Discount Rate determines the future value of the present projected cash flow. it gives a realistic figure. this helps to take invesrrment decision.

The given question referes to the real estate market.

the decision to invest in house is highly inflouenced by

a) Amount of Investment

b) Future Price of Investment

c) Present Rate of Rent

d) Present Interest Rate of Housing Loans

when the cash ouflow due to payment of rent superceeds the cash outflow of due to interest on housing loan, then buying a house is a viable solution.

when the cash outflow due to payment of rent less than the cash outflow due to interest on housing loan, then going for rented house is viable decision.

hence here, the avarage growth in the rent can be treated as discouting factor.

suppose a random sample of 12 houses on the market have an
average asking price of $165,000 with a standard deviation of
$28,000. Find a 95% confidence interval for the true mean asking
price for houses on the market.
Please show all steps to solving.

PEi real estate company believes that their average house price
in 2019 of $280,000 is higher than the mean price of all houses
sold in 2018 of $260,000. assumming that their estimate was based
on the first 50 sales in 2019 and the population standard deviation
of $75,000, test this hypothesis at the 90% confidence
interval.
a)state the hypotheses base on a one-tailed test
b)what is the level of significance? sketch this on a normal
distribution grapg.
c)select a test...

The current risk-free rate is 4% and the expected rate of return
on the market portfolio is 10%. The Brandywine Corporation has two
divisions of equal market value, i.e. the market value of their
assets is the same. The debt to equity ratio (D=E) is 3/7. The
companyís debt can be assumed to present no risk of default. For
the last few years, the Brandy division has been using a discount
rate of 12% in capital budgeting decisions and 1...

Assume the real money demand function is
L(Y;i)=2000+0.3Y-5000i
where Y is real output, P is the price level, i is the nominal
interest rate on non-monetary assets and monetary assets earn no
interest.
a) Assuming that the asset market is in equilibrium at i=0.05.
Find equilibrium levels of real money supply, nominal money supply,
and the velocity of money if P=100, and
Y=2000.
b) Find the real income elasticity of money demand at the
equilibrium level of money balances found...

To study the average price of living spaces in New York City,
you collect data on the monthly rent of 30 houses in the
city. You find a sample average rent cost of $565.63
with a standard deviation of $697.61. Use this
information to construct a 99% confidence interval for the true
mean rent cost in this area of New York
City. Show all work. You do
notneed to interpret the interval. (5 points)
11. It’s a fact that not everyone can roll their...

You are in a position where you decide to invest in bonds in the
market place. You are considering investing in the bonds
of Able Corp. Able Corp. bonds have a par value of
$1,000 each and pay annual interest of 7% and mature in 25 years.
Interest is paid semiannually.
The current annual rate of interest on bonds of similar risk in
the market place is 8% annually. This is also your
required rate of return. What price should you pay for...

You have won the State Lottery that calls for you to receive
$50,000 every six months for 20 years. The State uses a discount
rate of 5.7 percent. If you wish to receive a lump sum amount of
money today instead of the monthly payment, how much will you
receive today?
Group of answer choices
$1,175,456.84
$1,372,917.25
$1,184,283.00
$1,399,512.75
$2,000,000.00

You would like to know the fair market value of a house
that you are planning to buy. You think that you can rent out the
house starting one month from now for $8095 per month until you
sell it. Every month the rent will go up by 0.15%. The discount
rate is 6.0% APR compounded monthly. In 20 years from now, you will
sell the house for $2 million.
What is the present value of the payments that you...

In a market, the equilibrium price is 10 and the equilibrium quantity is 200. The state is now introducing a tax on
producers leading to a new equilibrium where the price is 15 and the quantity is 125
How big is the consumer tax burden?
a) 625
b) 187.5
c) 375
d) Can not be determined with the given information

Assume the average selling price for houses in a certain county
is $329,000 with a standard deviation of $26,000
a) Determine the coefficient of variation.
b) Calculate the z-score for a house that sells for
$295,000
c) Using the Empirical Rule, determine the range of prices that
includes 95% of the homes around the mean.
d). Using Chebychev's Theorem, determine the range of prices
that includes at least 88% of the homes around the mean.
This is where you solve....

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