QUESTIONS 109 THROUGH 114 RELATE TO ALTERNATIVE INVESTMENTS.

111. A real estate investment has the following characteristics: Annual rental income $1,900,000 Annual operating expenses $1,500,000 Available mortgage rate 6.5% Financing percentage 80% Capitalization Rate 12.5% Estimated holding period 5 years Investor’s tax rate 25% Based on the income approach, the value of the investment is closest to: A. $2,400,000 B. $3,200,000 C. $4,266,667

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