How to Calculate rent per month & Present value of a property?

Find the rent per month of a building from the following data –

Plot 400 m²  at Rs. 200/ m²

Building 150 m²  at Rs. 800/ m²

Total out going = 30 % of gross rent

Return expected on construction cost at 10 %

Return expected on cost of plot at 7 %

Ans.

Cost of plot = 400 x 200 = Rs. 80, 000

Cost of construction = 150 x 800 = Rs. 1,20,000

Return on the cost of construction = 1,20,000 x (10/100) = Rs. 12,000

Return of plot = 80,000 x (7/100) = Rs. 5,600

Total return per year = Rs. 17,600

Gross rent = Net income + Out goings

Let R be the Gross rent

R = 17,600 + R x (30/100) = 17,600 + 0.30 R

0.70 R = 17,600

Gross Rent R = 17,600/0.70 = Rs. 25,143

Rent per month = 25,143/12 = Rs. 2095.24

What is the present value of a property having a land area of 270 sq.m. with a 25 years old 1^st class building with a plinth area of 200 sq.m. The building is provided with first class water-supply, sanitary and electric fittings consider present plinth area rate with water supply, sanitary and electric fittings Rs. 400 sq.m.

Solution

New cost of building including all fittings at present = 200x400

 = 80,000 Rs.

Depreciated value of the building

D = P(100 – rd)ⁿ/100

Assuming the life of the building = 100 years

rd = 1.0 and n in this case = 25

therefore D = 80000(100 – 1)²⁵ / 100

D = 80000 x (99/100)²⁵  = Rs. 62240

Assuming cost of land = Rs. 150 sq.m.

Total cost of land = 270 x 150 = Rs. 40,500

Therefore, valuation of the property = 62240 + 40,500 = Rs. 1,02,740 /-