CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

Calculate the residual land value given the following information:

NOI year 1 = $360,000
Annual growth rate = 2.5%
Capitalization rate = 12.5%
Construction costs for new building = 2,000,000
A. 1,600,000
B. 1,000,000
C. 880,000
Explanation: 360,000/0.125 - 2,000,000 = 880,000.

User Contributed Comments 1

User Comment
siggarusfigs The cap rate was r-g, so don't subtract g anymore.
You need to log in first to add your comment.