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Calculate the unlevered net present value

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Reference no: EM132740664

Lady Gaga is purchasing an office building 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% 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.

Lady Gaga comes to you for help.

Calculate the unlevered net present value (NPV)

  •  A. NPV = 173,732
  •  B. NPV = -173,732
  •  C. NPV = 573,732
  •  D. NPV = -273,732

Reference no: EM132740664

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