You are interested in purchasing a residential apartment block as a long-term investment.
You have identified two identical apartment blocks in two different cities: City A and City B.
The discount rate for an asset with the same level of risk is 6%.
The following information is also relevant:
City A City B
Expected annual growth in net operating income (NOI) Years 2-10: 5% 4%
Terminal growth rate (post-Year 10): 2% 2%
Rent income Year 1: £120,000 £100,000
Maintenance expense Year 1 (Maintenance cost exists every year; this given value is only for Year 1) £30,000 £30,000
Purchase price: £1,600,000 £1,400,000
Discount rate: 6% 6%
Place this order or similar order and get an amazing discount. USE Discount code “GET20” for 20% discount
