User Account

All Pages

What is the irr of each investment

Assignment Help Finance Basics
Reference no: EM13910093

Kaimalino Properties (KP) is evaluating six real estate investments. Management plans to buy the properties today and sell them five years from today. The following table summarizes the initial cost and the expected sale price for each property, as well as the appropriate discount rate based on the risk of each venture.

Project Discount Rate Cost Today Expected Sale Price in year 5
Green Hills 8% $3,000,000 $10,000,000
Ocean Park Estates 15% $15,000,000 $75,500,000
West Ranch 8% $9,000,000 $46,500,000
Lakeview 15% $9,000,000 $50,000,000
Seabreeze 8% $6,000,000 $35,500,000
Mountain Ridge 15% $3,000,000 $18,000,000

KP has a total capital budget of $18,000,000 to invest in properties.

a. What is the IRR of each investment?

b. What is the NPV of each investment?

c. Given its budget of $18,000,000, which properties should KP choose?

d. Explain why the profitably index method could not be used if KP's budget were $12,000,000 instead. Which properties should KP choose in this case?

Reference no: EM13910093

Questions Cloud

Article- internal rate of return : Read the article below. Then write a one-to-two page paper answering the following question:-Which method do you think is the better one for making capital budgeting decisions - IRR or NPV?
Implementation : An Outsourcing Journey found in the Cases section of your digital book.Focus upon the idea of the company's short-term objectives, and through internal and external analyses create functional tactics to support the company's implementation and outsou..
What is the specific heat of the gas : An 80.0-gram sample of a gas was heated from 25 °C to 225 °C. During this process, 346 J of work was done by the system and its internal energy increased by 6965 J. What is the specific heat of the gas?
What are the health risks of overweight and obesity : "What are the Health Risks of Overweight and Obesity?"located at http://www.nhlbi.nih.gov/health/health-topics/topics/obe/risks.html Write a one to two page (1-2) page essay in which you: Describe the effect that obesity (childhood and / or adult) h..
What is the irr of each investment : Explain why the profitably index method could not be used if KP's budget were $12,000,000 instead. Which properties should KP choose in this case?
Determining the temperature of the sodium : Liquid sodium is being considered as an engine coolant. How many grams of liquid sodium (minimum) are needed to absorb 5.30 MJ of energy (in the form of heat) if the temperature of the sodium is not to increase by more than 10.0 °C? Use Cm = 30.8 ..
Find the time required for the amount to double : $52,000 is invested in an account at interest rate r = 5.1%, compounded continuously. Find the time required for the amount to double. (Approximate the result to two decimal places.)
Find the mean and the standard deviation of the population : Find the mean and the standard deviation of the population of all possible sample means, and calculate an interval containing 99.73 percent of all possible sample means.
Analysis of variance test : Introductory section: Include hypothesis and a review of the literature - Methodology section: Include subsections on Participants, Apparatus/Materials/Instruments, Procedure, and Design - The Analysis of Variance Test

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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