AG HBU Part 17. Applications of Market Analysis to the Three Approaches Flashcards
One to two years ago, the apartment market was active and apartment sites sold for $18,000 per allowable unit. However, the market is now overbuilt, and no sales have occurred in the past year. Positive residual demand is expected in three years. If the discount rate is 10% (including holding costs) what is the adjustment for market conditions that should be applied to the sales from one to two years ago?
A. −$5,400
B. −$4,476
C. −$1,800
D. $0
B. −$4,476
n= 3
i = 10
PMT = 0
FV= 18,000
solve for PV
= −13,524;
$13,524 − $18,000 = −$4,476
Course handbook guidance: Part 17, item I, 17.3 Problem
Residual demand analysis indicates negative residual demand currently. Feasibility rent exceeds market rent. Which of the following components of the cost approach accounts for these conditions?
A. external obsolescence
B. functional obsolescence
C. physical deterioration
D. property rights adjustment
A. external obsolescence
Course handbook guidance: Part 17, item III
