Question

In: Finance

You are considering investing in a real estate project which has an asking price of $30,000....

You are considering investing in a real estate project which has an asking price of $30,000. The project is expected to generate annual cash flows to you of: $4,500 in year 1, $5,000 in years 2-5, $8,000 in year 6 and $19,000 in year 7. Your required rate of return for projects with similar risk is 12% annually.

  1.          What is the investment value of this property?
  1.          What is the NPV of this investment opportunity?
  1.          What is the IRR of this investment opportunity?

Solutions

Expert Solution

jeff jeffy answered 2 hours ago
Next > < Previous

Related Solutions

Disadvantages of investing in real estate
Disadvantages of investing in real estate
A real estate developer is considering investing in a shopping mall on the outskirts of Atlanta,...
A real estate developer is considering investing in a shopping mall on the outskirts of Atlanta, Georgia. Three parcels of land are being evaluated. Of particular importance is the income in the area surrounding the proposed mall. A random sample of four families is selected near each proposed mall. Following are the sample results. At the .05 significance level, can the developer conclude there is a difference in the mean income? Use the usual six-step hypothesis testing procedure.
Akwasi is considering investing in either Real Estate or Shopping mall, a market survey revealed the...
Akwasi is considering investing in either Real Estate or Shopping mall, a market survey revealed the following returns with their respective business cycle which have been estimated occur evenly during the year. Business Cycle Returns Real Estate Shopping mall Boom 13% 16% Recession 4% 8% Normal 12% 14% Depression -5% 1% Which one will you advise him to choose and why? KINDLY ANSWER ASAP VERY URGENT
You are looking at investing in a real estate property that youexpect might be worth...
You are looking at investing in a real estate property that you expect might be worth $1,063,009 in 6 years. Based on the risk of the property, you require a return of 11.46%. What is the most you should be willing to pay for it today?
I need critical log on real estate project, means survey about real estate project.
I need critical log on real estate project, means survey about real estate project.
An analyst is assigned the task of evaluating a real estate investment project. Purchase price is...
An analyst is assigned the task of evaluating a real estate investment project. Purchase price is $700,000. Using the information in the table below, calculate the after-tax cash flow for the sale of the property. After-tax cash flow without property sale $33 546 Straight-line depreciation $18 700 Mortgage Payment $59 404 Cumulative Mortgage principle repayments until year 5 $20 783 80% financing at 10% interest rate Marginal income tax rate 31% Capital gains tax rate 20% Forecasted sales price $927...
You are considering investing in a project in Mexico. The project will be a 2 year...
You are considering investing in a project in Mexico. The project will be a 2 year project, has an initial cost of 100K USD, and expected after tax profit of 1 million MXP per year. You expect the MXP to be valued at 0.12 USD/MXP. There are two major risks that you think have the potential to significantly affect project performance, which you assume are independent: * You think with probability of 0.22 that the MXP will depreciate to 0.1...
You are considering investing in a project in Mexico. The project will be a 2 year...
You are considering investing in a project in Mexico. The project will be a 2 year project, has an initial cost of 100K USD, and expected after tax profit of 1 million MXP per year. You expect the MXP to be valued at 0.12 USD/MXP. There are two major risks that you think have the potential to significantly affect project performance, which you assume are independent: * You think with probability of 0.16 that the MXP will depreciate to 0.1...
You are considering investing in a project in Mexico. The project will be a 2 year...
You are considering investing in a project in Mexico. The project will be a 2 year project, has an initial cost of 100K USD, and expected after tax profit of 1 million MXP per year. You expect the MXP to be valued at 0.12 USD/MXP. There are two major risks that you think have the potential to significantly affect project performance, which you assume are independent: * You think with probability of 0.17 that the MXP will depreciate to 0.1...
Suppose that you are considering a real estate investment that will provide you with the following...
Suppose that you are considering a real estate investment that will provide you with the following cash flows: Year 1: $160,000 Year 2: 140,000 Year 3: 180,000 Year 4: $5.4 million If the asking price for the property is $3.5 million, what will the NPV be for this investment? Show work a.14.90% b.15.57% c. 16.56% d:14.57% e: none of the above
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT