Total development costs (including sufficient profit for the developers) are $200/SF. Cap rates in the asset market are 10%. What is the "replacement cost rent" in this market?
A) $20.00/SF.
B) $16.00/SF.
C) $12.50/SF.
D) $10.00/SF.

Question

Quizplus · Accepted Answer

Replacement cost rent is calculated by dividing the total development costs by the cap rate. Here, $200/SF divided by 10% (or 0.10) equals $20.00/SF.

Total Development Costs (Including Sufficient Profit for the Developers) Are