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11. You would like to develop an office building. Your analysts forecast that it will cost...

11. You would like to develop an office building. Your analysts forecast that it will cost you $1,000,000 immediately (time 0), and it will cost you $500,000 in one year (time 1). They forecast you can sell the building for $2,400,000 in two years (time 2). If your discount rate is i= 25%, what is the net present value of this investment? (Answer is NOT 532,000, I think its 136,000)

12. What is the IRR of the project in question 11? (if you are using an ordinary calculator, it is a quadratic equation; if you are using a financial calculator, use the CF method). (Answer is NOT 54.67, I think its 31.92%)

Solutions

Expert Solution

hence npv = $136000

IRR = 31.92%

jeff jeffy answered 2 years ago
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