Present Value [3133]

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Annual rent for a property is $5,000 for the first 5 years; $8,000 for the second 5 years; and $4,000 for the final five years.

 

If the value of the reversion at the end of the lease period is projected to be $60,000, what is the value of the leased fee if a reasonable discount rate is 10%?

 

Column

Rate

Period

Amount

Factor

Value

5

10.0%

5

$5,000

3.790787

$18,954

5

10.0%

10

$8,000

6.144567

$49,157

5

10.0%

5

-$8,000

3.790787

-$30,326

5

10.0%

15

$4,000

7.606080

$30,424

5

10.0%

10

-$4,000

6.144567

-$24,578

4

10.0%

15

$60,000

0.239392

$14,364

 

 

 

 

 

$57,994


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