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In: Finance
Seabreeze Properties is evaluating a real estate investment of Green Hills Estates. Management plans to buy...
Seabreeze Properties is evaluating a real estate investment of Green Hills Estates. Management plans to buy the property today and sell it 12 years from today. The initial cost of the property is $7 million and the expected sale price is $19 million. What is the IRR of the investment? Enter your answer as a percentage and rounded to 2 DECIMAL PLACES. Do not include the percentage sign in your answer.
Enter your response below.
%
Solutions
Expert Solution
IRR(internal Rate of Return) is the rate at which the NPV =0.
Here IRR can be found using the excel function=IRR()
The initial investment=$7,000,000
The Sale price is $19,000,000 (year 12 inflow)
The formula used=IRR(B2:B14) We get IRR as 8.68% or 8.68
jeff jeffy answered 2 years agoRelated Solutions
Seabreeze Properties is evaluating a real estate investment of Green Hills Estates. Management plans to buy...
Seabreeze Properties is evaluating a real estate investment of
Green Hills Estates. Management plans to buy the property today and
sell it 12 years from today. The initial cost of the property is $7
million and the expected sale price is $19 million. What is the IRR
of the investment? Enter your answer as a percentage and rounded to
2 DECIMAL PLACES. Do not include the percentage sign in your
answer.
Enter your response below.
%
Kaimalino Properties (KP) is evaluating six real estate investments. Management plans to buy the properties today...
Kaimalino Properties (KP) is evaluating six real estate
investments. Management plans to buy the properties today and sell
them five years from today. The following table summarizes the
initial cost and the expected sale price for each property, as well
as the appropriate discount rate based on the risk of each
venture.
Project
Cost Today
Discount Rate(%)
Expected Sale
Price in Year
5
Mountain Ridge
3,000,000
15
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15,000,000
15
75,500,000
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15
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6,000,000 ...
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Kartman Corporation is evaluating four different real estate
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The following table summarizes the initial cost and the sale
price in three years for each property:
Cost Today
Sale Price in Year 3
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$1,050,000
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1,520,000
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940,000
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Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today...
Kartman Corporation is evaluating four different real estate
investments. Management plans to buy the properties today and sell
them three years from today. The annual discount rate for these
investments is 16%. The following table summarizes the initial cost
and the sale price in three years for each property:
Cost Today
Sale Price in Year 3
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$540,000
$1,040,000
Real Property Estates
810,000
1,410,000
Lost Lake Properties
530,000
930,000
Overlook
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240,000
Kartman has a total capital budget of...
Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today...
Kartman Corporation is evaluating four different real estate
investments. Management plans to buy the properties today and sell
them three years from today. The annual discount rate for these
investments is
13%.
The following table summarizes the initial cost and the sale
price in three years for each property:
Cost Today
Sale Price in Year 3
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Kartman has a total capital budget of...
Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today...
Kartman Corporation is evaluating four different real estate
investments. Management plans to buy the properties today and sell
them three years from today. The annual discount rate for these
investments is
16%.
The following table summarizes the initial cost and the sale
price in three years for each property:
Cost Today
Sale Price in Year 3
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$1,090,000
Real Property Estates
880,000
1,480,000
Lost Lake Properties
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980,000
Overlook
90,000
290,000
Kartman has a total capital budget of...
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Capital gains tax rate
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