What is the equity after-tax irr

Assignment Help Financial Management
Reference no: EM131898031

Consider a commercial property that costs $1 million (90% building, 10% land) with the CAP rate of 10%. Assume that the net operating income and value of the property both grow at a rate of 5% per year. Suppose 80% of the property value is financed with a constant payment mortgage of 30 year amortization and 10% interest rate with monthly payments. Assume 31.5 years of straight line depreciation, Income tax rate of 40%, 20% capital gain tax rate and 20% depreciation recapture. Holding period 5 years.? (a)What is the equity before-tax IRR?? (b) What is the equity after-tax IRR?

Reference no: EM131898031

Questions Cloud

Robotic surgery definition - what are the benefits : Prepare a presentation that describes technologies - Robotic Surgery Definition
What is a grand theory : What is a grand theory? Since it may seek to explain all communication behavior in a manner that is universally true, what might it resemble?
Post margin under the option clearing corporation rules : Why is the holder of an option not required to post margin under the Option Clearing Corporation rules?
Determine the probability of drawing a full house : Determine the probability of drawing a "Full House" (three cards of one denomination and two cards of another denomination).
What is the equity after-tax irr : What is the equity before-tax IRR?? What is the equity after-tax IRR?
Probability of landing heads : You toss the coins 6 times. find the probability that you tossed at least 2 heads out of your 6 tosses
Write a reflection paper on independent party : Write a reflection paper. The paper should include your reaction to the arguments in the article, as well as any observations you have about the discussion.
Discuss the concept of social stratification : Thoughts on the concept of social stratification and the role that socioeconomic factors play in consumer behavior.
How would you improve the draft synopsis : What is the validated tool that will be used to collect data - How would you improve the draft synopsis in Example 1 - Impact of long-term consumption

Reviews

Write a Review

Financial Management Questions & Answers

  Investment in another that guarantees cash flow

Paltron Company made an investment in another that guarantees cash flow $ 22,500 each year for the next 5 years. If the company uses a discount rate of 15% on their investments, what is the present value of this investment?

  What is the difference in the effective interest rates

You have a savings account that pays 3.7% interest compounded semi annually, but you are considering transferring your funds into a savings account that pays 3.3% interest compounded monthly. Calculate the difference in the effective interest rates o..

  Calculate couchs earnings credit

Calculate Couch’s earnings credit. What collected balance is required to ensure that Couch’s service charges are offset by the earnings credit?

  Compute the percentage total return-capital gains yield

Suppose a stock had an initial price of $121 per share, paid a dividend of $3.30 per share during the year, and had an ending share price of $153. Compute the percentage total return. What was the dividend yield? What was the capital gains yield?

  What nominal interest rate in percentage is being charged

What nominal interest rate in percentage is being charged?

  Laws governing qualified retirement plans

An employer suggested to provide the following vesting schedules. Determine if these schedules comply with the laws governing qualified retirement plans [explain]:

  Which formula would you use to solve for the payment

Which formula would you use to solve for the payment required for a car loan if you know the interest rate, length of the loan, and the borrowed amount?  Explain.

  What price do you expect art shares to sell for in four year

What price do you expect ART shares to sell for in 4 years?

  What is the breakeven stock price for this portfolio

What is the breakeven stock price for this portfolio? Plot the payoff and profit diagrams for this portfolio.

  Stock portfolio-what is the portfolio beta

You own a stock portfolio invested 27 percent in Stock Q, 17 percent in Stock R, 43 percent in Stock S, and 13 percent in Stock T. The betas for these four stocks are 0.96, 1.02, 1.42, and 1.87, respectively. What is the portfolio beta?

  Maintain a target capital structure

David Rose Inc. forecasts a capital budget of $500,000 next year with forecasted net income of $400,000. The company wants to maintain a target capital structure of 30% debt and 70% equity. If the company follows the residual dividend policy, how muc..

  Compute the npv for project

Compute the npv for project x and accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent.

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!

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