Determine the range of opportunity cost of funds

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Towers 1 and 2. The purchase price for each property is $2,000,000. The cash flow for both properties:

                             Y1                     Y2                     Y3

Tower 1             $113,000      1,323,000.   1,920,000

Toweled 2          $270,000.       1,500,000.  1,520,000

Problem 1: discount rate %6 . determine the present value for each property.

Problem 2: Using the same discount rate, what is each property's NPV? Plot the NPV for discount rates from 1% to 34%.

Problem 3: Determine each property's IRR.

Problem 4: For Tower 1, determine the range of your opportunity cost of funds when you would invest in Tower 1 and the range when you won't invest in the Tower.

Problem 5: If your objective is to maximize wealth, determine under what circumstance you would invest in Tower 1, Tower 2 or neither. Plot both NPVs together.

Reference no: EM132986330

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