You own the freehold of a commercial office and retail building where your net of all...
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You own the freehold of a commercial office and retail building where your net of all outgoings income is $325,000 per year on leases that were granted several years ago. Those leases are all subject to market rental value rent reviews in 3 years time. You anticipate that at current rentals these reviews will increase the net of all outgoings income to $654,000 per year. Value your freehold interest using a yield of 8% for the term and 7% for the reversion. When discounting the value of the reversion you should discount at the term yield. You own the freehold of a commercial office and retail building where your net of all outgoings income is $325,000 per year on leases that were granted several years ago. Those leases are all subject to market rental value rent reviews in 3 years time. You anticipate that at current rentals these reviews will increase the net of all outgoings income to $654,000 per year. Value your freehold interest using a yield of 8% for the term and 7% for the reversion. When discounting the value of the reversion you should discount at the term yield.
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Related Book For
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
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