User Account

All Pages

Compute the variance and standard deviation of the irrs

Assignment Help Finance Basics
Reference no: EM131326747

An investor has projected three possible scenarios for a project as follows: Pessimistic-NOI will be $200,000 the first year, and then decrease 2 percent per year over a five-year holding period. The property will sell for $1.8 million after five years. Most likely-NOI will be level at $200,000 per year for the next five years (level NOI) and the property will sell for $2 million.

Optimistic-NOI will be $200,000 the first year and increase 3 percent per year over a five-year holding period. The property will then sell for $2.2 million. The asking price for the property is $2 million. The investor thinks there is about a 30 percent probability for the pessimistic scenario, a 40 percent probability for the most likely scenario, and a 30 percent probability for the optimistic scenario.

a. Compute the IRR for each scenario.

b. Compute the expected IRR.

c. Compute the variance and standard deviation of the IRRs.

d. Would this project be better than one with a 12 percent expected return and a standard deviation of 4 percent?

Reference no: EM131326747

Questions Cloud

What are arguments for both approaches : Discuss your findings. Is it better to make strict ACLs and let users ask for exceptions, or to use few ACLs and only add them as they are discovered to be needed? What are arguments for both approaches?
What is the break even mortgage interest rate : What is the break-even mortgage interest rate (BEIR) in the context of financial leverage? Would you ever expect an investor to pay a break-even interest rate when financing a property? Why or why not?
Discuss the types of assessment tools the psychologist use : Discuss the types of assessment tools the psychologist might use in his or her evaluation and how these tools would help in guiding diagnosis and treatment. In summary, you want to make an argument for why a clinical psychologist would be the best..
Describe the term performance booster : Describe the term performance booster(s) and how it relates to a Virtual Teams. There are three accountability Questions discussed in Chapter six of our class text book, - Discuss each with example.
Compute the variance and standard deviation of the irrs : Compute the IRR for each scenario.-  Compute the expected IRR.- Compute the variance and standard deviation of the IRRs.
Secure network client os : All operating systems have a set of "kernel" code that contains the basic core of the operating system. The kernel code allows the user to control the hardware and many of the applications used by the computer.
Do bill and melinda gates have an lmp : What type of self-concept do Bill and Melinda Gates have, and how does it affect their success?
What is the traditional cash equivalency approach : What is the traditional cash equivalency approach used to determine how below-market-rate loans affect value?
Discuss article-a kid was teased for wearing fila shoes : Oral Presentation and Written Analysis. You are required to do a six-to-eight-minute oral presentation. The presentation will involve analysis of a short video (the video should not be more than half of your presentation). Each person will pre..

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd