Question

Total rents declined $1,000 per month as a result of the city banning on-street parking in front and along side a small office building. Assuming a capitalization rate of 8%, the building suffered a decline in value of _.

Answer 1

The decline in value of the small office building as a result of the ban on on-street parking can be calculated using the formula: decline in value = decline in rents / capitalization rate. In this case, the decline would be $12,500.

Step-by-step explanation:

The decline in total rents of $1,000 per month as a result of the city banning on-street parking in front and along the side of a small office building would affect the building's value. To calculate the decline in value, we can use the formula: decline in value = decline in rents / capitalization rate. In this case, the decline in value would be $1,000 / 0.08 (8%) = $12,500.