Calculate the unlevered npv of investment

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Your client, a real estate company, is evaluating a real estate project of $15,000,000 that will provide them with yearly NOI of $1,950,000 for the next 10 years and can then be resold for an amount estimated at $20,000,000. They can finance 70% of the purchase price through a 10-year mortgage with an amortization period of 25 years and an interest rate of 7%.

Your client will only proceed with the project if its returns are greater than his WACC or cost of equity. He provides you with the following information about his company:

Market value of equity $50,000,000
Cost of equity 25%
Market value of debt $75,000,000
Cost of debt 10%
Tax rate 30%

a) Calculate the unlevered NPV of this investment
b) Calculate the unlevered IRR of this investment
c) Calculate the levered NPV
d) Calculate the levered IRR of this investment

Reference no: EM133000339

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