USE EXCEL ONLY AND SHOW FORMULAS PLEASE! An office building is purchased with the following projected...

USE EXCEL ONLY AND SHOW FORMULAS PLEASE!

An office building is purchased with the following projected cash flows:

• NOI is expected to be $130,000 in year 1 with 5 percent annual increases.

• The purchase price of the property is $720,000.

• 100 percent equity financing is used to purchase the property.

• The property is sold at the end of year 4 for $860,000 with selling costs of 4 percent.

• The required unlevered rate of return is 14 percent.

a. Calculate the unlevered internal rate of return (IRR).

b. Calculate the unlevered net present value (NPV).

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Expert Solution

jeff jeffy answered 1 year ago

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