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What is the expected sales price when you sell the asset

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Reference no: EM132965191

Question - You are considering the purchase of an apartment building with the following information:

Purchase price $16,667,000

Expected Year 1 NOI $1,000,000

Expected annual NOI growth 4%

Expected Exit Cap Rate 6.5%

Holding Period 3 years

Required - Answer the following:

1. What is the initial (going in) cap rate?

2. What is the expected sales price when you sell the asset after 3 years?

3. What is the Net Present Value at a 7% Discount Rate?

4. What is the IRR for this investment?

5. Would you buy this asset for $16,667,000? Why or why not?

Reference no: EM132965191

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