Compute the irr and the npv of project

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Reference no: EM132726423

Longhorn Properties (LHP) is evaluating five real estate investments. The management plans to buy the properties today and sell them five years from today. The following table summarizes the initial cost and the expected sale price for each property (in millions of US$), as well as the appropriate discount rate based on the risk of each venture.

Project Cost Today Discount Rate Expected Sale Price After 5 Years
Mount Bonnell $3 15% $18
Great Hills $9 15% $50
Broken Spoke $6 8% $36
South Congress $3 8% $10
West Lake $9 8% $48

a. Compute the IRR and the NPV of each project

b. Suppose LHP has a total capital budget of $18 million to invest in properties. Which properties should LHP build?

c. Suppose LHP has a total capital budget of $12 million to invest in properties. Which properties should LHP build?

Reference no: EM132726423

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