Horatio ltd wishes to purchase a rental apartment as part, Ask an Expert

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Horatio Ltd. wishes to purchase a rental apartment as part of its property portfolio. Gross rental income is expected to be $380 per week. Expenses would include council rates $1,300 per annum, utilities rates $850 per annum, maintenance $2030 per annum, body corporate fees $640 per annum, real estate agent fees $30 per week, and estimated stamp duty of $15,000. Rental returns and Horatio Ltd's. required rate of return are identical at 6.5%.

a) What is Horatio Ltd's. maximum willingness to pay for this property using the net capitalization method.

b) If Horatio Ltd. purchased this property for $220,000, what would its annual return be?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9883088

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