Compute what is a expected return from the investment

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Problem 1: A's broker has brought an off-market real estate investment deal to his attention. The broker informs "A" that he can expect at least 13% annual cash-on-cash yield and 7% in annual capital appreciation from this investment. "B" would like to know what is A's expected return from this investment?

(a) 6.0%

(b) 20.0%

(c) 15.0%

(d) 17.5%

Problem 2: if the inflation rate is 4%, "B" would like to know what is A's expected annual real return from the investment?

(a) 15.0%

(b) 20.0%

(c) 16.0%

(d) 12.0%

Reference no: EM132958261

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