Question

In: Finance

A real estate partnership predicts it will pay $500 at the end of each quarter to...

A real estate partnership predicts it will pay $500 at the end of each quarter to its partners for the next two years. Assume the partners earn an 8% return compounded quarterly on their investment, how much should they pay for the investment?

1656.06

4223.98

3662.74

3235.99

Solutions

Expert Solution

Future value = Periodic payment*(1-(1+r/n)^-n*t/r/n)

Periodic payment = 500

Rate of interest (r) = 8%

Maturity (t) = 2 years

Compounding periods (n) = 4

Future value = 500*(1-(1+0.08/4)^-2*4/0.08/4)

= 500*(1-(1.02)^-8/0.02)

= 500*(1-0.85349/0.02)

=500*(0.1465/0.02)

= 500*7.3254

= 3662.7

Answer : 3662.74


Related Solutions

A real estate partnership predicts it will pay $500 at the end of each quarter to...
A real estate partnership predicts it will pay $500 at the end of each quarter to its partners for the next two years. Assume the partners earn an 8% return compounded quarterly on their investment, how much should they pay for the investment? 1656.06 4223.98 3662.74 3235.99
18. John is an individual and is a real estate professional and materially participates in Partnership...
18. John is an individual and is a real estate professional and materially participates in Partnership A and B. John is a limited partner in two real estate partnerships. Partnership A produces a passive loss of $3,000 (allocated to John). Partnership B produces passive income of $5,000 (allocated to John). How does John treat the income/(loss) on his tax return? A. Include $2,000 net passive income in taxable income. B. Recognize income of $5,000 and don’t deduct losses of $3,000....
Joe entered into partnership with two others in the establishment of a real estate sales agency....
Joe entered into partnership with two others in the establishment of a real estate sales agency. The other two, Sam and Harry, had considerable experience in the real estate business but no money. Joe, on the other hand, had his own home and several significant assets, and although he didn't have any experience in the real estate business, his monetary contribution made him an equal partner with Sam and Harry. Unfortunately, Harry misused some trust funds that had come into...
1. a, b, and c agree to form a real estate investment partnership. they decide to...
1. a, b, and c agree to form a real estate investment partnership. they decide to form an equal, cash-method, general partnership, with each contributing property worth $300,000. A contributes cash in that amount; B contributes raw land purchased for $100,000 and held for two years; C contributes publicly traded stock purchased for $400,000 and held for six months. The parties anticipate a serious exploration of the real estate market and will either hold the real estate and any subsequently...
Joe entered into partnership with two others in the establishment of a real estate sales agency....
Joe entered into partnership with two others in the establishment of a real estate sales agency. The other two, Sam and Harry, had considerable experience in the real estate business but no money. Joe, on the other hand, had his own home and several significant assets, and although he didn't have any experience in the real estate business, his monetary contribution made him an equal partner with Sam and Harry. Unfortunately, Harry misused some trust funds that had come into...
A town has 500 real estate agents. The mean value of the properties sold in a...
A town has 500 real estate agents. The mean value of the properties sold in a year by these agents is 650,000​, and the standard deviation is 200,000. A random sample of 100 agents is​ selected, and the value of the properties they sold in a year is recorded. a. What is the standard error of the sample​ mean? b. What is the probability that the sample mean exceeds 656,000​? c. What is the probability that the sample mean exceeds...
Partnership Income Allocation Whitman and Greene are partners in a real estate venture. At January 1,...
Partnership Income Allocation Whitman and Greene are partners in a real estate venture. At January 1, 2020, their respective capital balances were $200,000 and $245,000. Their partnership agreement provides that Whitman is to receive a guaranteed salary of $100,000, and that remaining profits after the salary are to be shared in a 2:3 ratio. Partnership operations for the year 2020 resulted in income of $75,000, before distributions to partners. Whitman’s salary is paid in cash during the year, but there...
Jack MacLean has entered into a real estate development partnership with Bill Lyons and June Reese....
Jack MacLean has entered into a real estate development partnership with Bill Lyons and June Reese. Bill owns one-fifth of the partnership, while June has a one-fourth interest. The partners will divide all profits on the basis of their fractional ownership. The partnership bought 900 acres of land and plans to subdivide each lot into 2.5 acres. Homes in the area have been selling for $250,000. By time of completion, Jack estimates the price of each home will increase by...
The adjusted trial balance shown below is for Gordon Real Estate at the end of its...
The adjusted trial balance shown below is for Gordon Real Estate at the end of its reporting period 30 June 2019. Debit $ Credit $ Cash at bank 11440 Accounts receivable 10340 Office supplies 770 Prepaid insurance 2750 Office equipment 15400 Accumulated depreciation—office equipment 5280 Accounts payable 3680 Salaries payable 1200 Rent revenue received in advance 750 Gordon, Capital 17820 Gordon, Drawings 650 Service revenue 38000 Rent revenue 12000 Salaries expense 19200 Office supplies expense 1700 Rent expense 14500 Insurance...
The adjusted trial balance shown below is for Greenwood Real Estate at the end of its...
The adjusted trial balance shown below is for Greenwood Real Estate at the end of its reporting period 30 June 2019. Debit $ Credit $ Cash at bank 10400 Accounts receivable 9400 Office supplies 600 Prepaid insurance 2500 Office equipment 14000 Accumulated depreciation—office equipment 4800 Accounts payable 3800 Salaries payable 2000 Rent revenue received in advance 600 Greenwood, Capital 16200 Greenwood, Drawings 700 Service revenue 35600 Rent revenue 12000 Salaries expense 28000 Office supplies expense 1700 Utility expense 5000 Insurance...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT