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Solve the unlevered npv of the investment

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Reference no: EM132971310

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%

Problem a) Calculate the unlevered NPV of this investment

Problem b) Calculate the unlevered IRR of this investment

Problem c) Calculate the levered NPV

Problem d) Calculate the levered IRR of this investment

Reference no: EM132971310

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