A new residential development will face competition from other new developments, other builders, and sales of existing homes. To determine if demand in that market segment will be sufficient to justify proceeding with the project, a developer would be most interested in estimating a:
A) capture rate
B) capitalization rate
C) risk-free rate
D) risk premium

Question

Quizplus · Accepted Answer

A capture rate estimates the percentage of potential buyers in a given market segment that are expected to purchase a particular development's units. This information helps the developer determine the potential demand for their project and decide whether or not to proceed with it. Capitalization rate, risk-free rate, and risk premium are not directly related to estimating demand for a new residential development.

A New Residential Development Will Face Competition from Other New