Two potential uses are identified for a parcel. One use costs $240,000 to construct and provides...
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Two potential uses are identified for a parcel. One use costs $240,000 to construct and provides an income of $50,000 per year; in order to proceed with this use, legal and consulting fees to receive a zoning variance will cost $22,000. Another use cost $310,000 and results in an income of $48,000 per year; due to physical constraints, however, $25,000 must be set aside to provide adequate storm water drainage ponds for this use. If a capitalization rate of 12 percent is used in the first example, and a capitalization rate of 10 percent is used in the second, which use is the highest-and-best use? Two potential uses are identified for a parcel. One use costs $240,000 to construct and provides an income of $50,000 per year; in order to proceed with this use, legal and consulting fees to receive a zoning variance will cost $22,000. Another use cost $310,000 and results in an income of $48,000 per year; due to physical constraints, however, $25,000 must be set aside to provide adequate storm water drainage ponds for this use. If a capitalization rate of 12 percent is used in the first example, and a capitalization rate of 10 percent is used in the second, which use is the highest-and-best use?
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To determine the highestandbest use of the parcel we need to calculate the net presen... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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