Question 1 / 22:  A property has a McDonalds restaurant on it, which can earn $50,000 per year. In any other use (including another brand of restaurant), the most it can earn is $40,000 per year. Assuming a discount rate of 10% and constant cash flow in perpetuity, what is the "investment value" of this property to McDonalds, and what is its "market value"?
A  Both investment value and market value are $400,000.
B  Both investment value and market value are $500,000.
C  Investment value is $400,000 and market value is $500,000.
D  Investment value is $500,000 and market value is $400,000.
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Real Estate Finance & Investment Final Exam 2006

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Attribution:  Geltner, David, and Tod McGrath. 11.431J Real Estate Finance and Investment, Fall 2006. (MIT OpenCourseWare: Massachusetts Institute of Technology), http://ocw.mit.edu/courses/urban-studies-and-planning/11-431j-real-estate-finance-and-investment-fall-2006 (Accessed 1 May, 2014). License: Creative Commons BY-NC-SA
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