A real state investment is expected to return to its owner $4500 per year for 26...

A real state investment is expected to return to its owner $4500 per year for 26 years at the end of year 26 after expenses. At the end of year 26, the property is expected too be sold for $69,000. Assuming the required rate of return is 10% for investments with this drgree of risk,

what is the net present value of this property if the purchase price is $28,000 today?

In the previous previous problem, which statement best describes the internal rate of return (IRR) of the investment?

Solutions

Expert Solution

The second part of the question is either missing the question altogether or if wants to calculate the IRR for this question, use the financial calculator and put the same data (excepet the required rate of return ) as used for calculating NPV, and calculate IRR, the answer would come out to be 16.53%.

jeff jeffy answered 1 year ago

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