An investor buys a building for $500,000 cash and leases it for payments of: $85,000 $85,000 $90,000 $90,000 Year 1 Year 2 Year 3 Year 4 At the end of Year 4, the building will be sold for $515,000 in net sales proceeds. Similar investments yield a 13% return. (Questions 19-20) 19. What is the net present value (NPV)? a) $65,812.67 b) $72,490.37 c) $75,221.05 d) $85,221.05 20. What is the internal rate of return (IRR)? a) 12.00% b) 17.99% c) 18.45%
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- If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%H5. A person has a property that they want to sell, and they need to know the present value of the following options: (for both options consider a rate of 21.6%) a. Advance payments of $25,000 every six months for 5 years b. Payments of $9,000 quarterly for 4 years and a final payment of $20,000 nine months after the last depositYou have the opportunity to purchase a security that will pay you $100,000 when it matures in three years. If you pay $73,119 for this asset, what rate of return will you earn? a. 12% b. 18% c. 11% d. 10%
- Let us assume that an investor can obtain an 80% LTV loan for a property valued at 500,000 at a 10% interest rate to be amortized over 25 years with monthly payments. If the property generates $70,000 net operating income per year, answer the following. What would be the Before-Tax Cash Flow from the Property Sale (BTCFs) if the property were sold in Year 5 for $440,000? $63,344.93 $816,655.07 $396,382.36 $440,000.00You have been asked to estimate the market value of an income-producing property. The table below provides 5 years of projected cash flows for the property. Use the discounted cash flow approach to income valuation to calculate the market value. Assume that you sell the property at the end of year 5 and that the net proceeds from the sale are $5 million. Also assume that the discount rate is 10%. PGI EGI NOI Year 1 $4.18 million $750,000 $780,000 $811,200 $637,500 $663,000 $689,520 $318,750 $331,500 $344,760 $6.11 million $4.12 million Year 2 $4.40 million Year 3 Year 4 $843,648 $717,101 $358,550 Year 5 $877,394 $745,785 $372,892An investor is considering the purchase of a financial instrument that promises to make the following payments: Promised Payment by Issuer $100 $100 $100 $100 $1,100 Years from Now 1 2 3 4 5 This financial instrument is selling for $1,243.83. Assume that the investor wants a 6.25% annual interest rate on this investment. Should the investor purchase this investment? OA. Yes, the financial instrument is attractive O B. No, the financial instrument is unattractive. C. Can't be answered. More information is needed to answer the question D. Indifferent.
- 2. Calculate the present value to purchase a lot of land if $18,000 is put down and $2,000 is paid per quarter for 3 years. Assume that there is 6% interest that is compounded quarterly if the cash price for the land is 825, 000, is it better to pay cash or finance the purchase? According to the Present Value of an Annuity Table, at 1.5% interest for 5 years, the factor is 17.16564 O $52,337,28, it is better to pay $25,000 cash 14.782.64 is better to finance the purchase $27, 565.28 at is better to pay $25,000 cash O822,782.64 it is better to finance the purchase "At (harger CanadAn investor is considering purchasing a sale-leaseback with the following 10-year cash flows: ΕΟΥΙ Cash Flows + 0 1 $350,000 2 $357,000 3 $364,140 4 $371,423 5 $378,851 6 $386,428 7 $394,157 8 $402,040 9 $410,081 10 $418,282 + Sale Proceeds $5,333,000 If the seller/lessee in the previous question insists on a purchase price of $5,000,000 today, what would the investor's yield be? 9.56 percent 7.66 percent 8.22 percent 8.03 percentAn investment pays you $30,000 at the end of this year, and $15,000 at the end of each of the four following years. What is the present value (PV) of this investment, given that the interest rate is 3% per year? A. $66,507 B. $83,259 OC. $41,630 OD. $99,911 Clear all Check answer
- An investment will pay $600 at the end of each of the next 2 years, $700 at the end of Year 3, and $1,000 at the end of Year 4. What is its present value if other investments of equal risk earn 6 percent annually? a. $1,821.82 b. $1,913.83 c. $2,297.07 d. $2,479.86 e. $2,735.85What is the present value (PV) of $300,000 received five years from now, assuming the interest rate is 9% per year? O A. $194,979 B. $243,724 C. $341,214 O D. $180,000An investor is considering the purchase of a rental house for $120,000. The house generates monthly rent of $1.150 per month with no expected vacancy, and annual operating expenses are expected to be $4,800. The investor expects to hold the property for five years and then hopes to sell for $150,000.Based on these assumptions, what is the expected overall eturn on this investment? (a) 9.27 (b)10.22% (c)10.69% (d)11.48% (e) 12.40%