What is the net present value for this property

Assignment Help Financial Accounting
Reference no: EM132944061

Question - An income property is under evaluation for purchase with a $515,000 loan (Partially amortizing loan with 8% annual rate for 10 years with a payment of 100,000 at the end. Payments are made annually and happen at the end of each year). We plan to hold the property for 3 years and then sell it at the end of year 3. The NOI for year 1 is 68,000 with a growth rate of 2%. The end capitalization rate is 12%. We assume after year 3, the NOI still increases at a rate of 2%.

Required -

a. With the overall discount rate of 15%, what is the net present value for this property?

b. With the asking price of 289,000, what is the IRR for this investment?

Reference no: EM132944061

Questions Cloud

What is the present value of this project : Your perpetuity project has cash flows that grow at 1% faster than inflation forever, starting with $20 next year. What is the present value of this project
What is the entry in the statement of comprehensive income : At the beginning of the year, the business has a provision for doubtful debts of RM2,600. What is the entry in the Statement of Comprehensive Income
Explain how internal users can use management reports : Briefly explain how internal users can use management reports to make decisions. Give at least two examples of management reports
Will you suggest Unifeb to proceed the acquisition process : Current T-Bills rate is 6.5% with market return of 14%. Will you suggest Unifeb to proceed the acquisition process? Why
What is the net present value for this property : An income property is under evaluation for purchase with a $515,000 loan. With the overall discount rate of 15%, what is the net present value for this property
Journalize the adjusting entry needed at dec : Journalize the adjusting entry needed at Dec. 31 for each of the following independent situations: On Sep. 1, when we paid $6,000 for one-year insurance policy
Which option do you think would bring him higher amount : Mr. Shuja has savings of Rs. 500,000 and he has two options to make investment. Which option do you think would bring him higher amount
Calculate the acquisition cost of the franchise : Brown Company can borrow at 10% for a loan of this type. Calculate the acquisition cost of the franchise
What is the bond nominal coupon interest rate : Field Industries' outstanding bonds have a 25-year maturity and $1,000 par value. What is the bond nominal coupon interest rate

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare the cash budget for the month ending

Use the below data to create a cash budget showing expected cash receipts and disbursements for the month of May, and cash balance expected as of May 31, 2017. Prepare the cash budget for the month ending May 31, 2017. Provide an analysis of the cash..

  How a company could pursue shareholder wealth maximization

Outline and provide examples of how a company could pursue shareholder wealth maximization in relation to the Capital structure concepts

  Should wolf pack recognize the decline in the value

Wolf Pack Transport Co., Should Wolf Pack recognize the decline in the value of its holdings in MVD in its current year financial statements?

  Job-order costing system-what was the cost of jobs completed

Under Kasey Co.’s job-order costing system, manufacturing overhead is applied to work-in-process using a predetermined annual overhead rate. Kasey had neither beginning nor ending work-in process inventory. What was the cost of jobs completed in Janu..

  Prepare a flexible budget in good format

Prepare a flexible budget in good format. Compute the flexible variances and indicate whether favorable or unfavorable.

  What ways would the change from lifo to fifo help

In what ways would the change from LIFO to FIFO help the executive personally? Would you approve the proposal to move from LIFO to FIFO?

  Determine the discount rate used by the multi-state lottery

Calculate the 19 additional annual payments using the future value formula and How do you know this answer is correct

  Statement of cash flows in pounds-sullivan island company

Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary and then translate these amounts into U.S. dollars.

  What is the six-month forward exchange rate

What is the Six-month forward exchange rate? Do not round intermediate calculations. Round your answer to six decimal places.

  What value would project for a share of stock

What value would you project for a share of stock at the beginning of year 3? Highland Pet Supplies Company forecasts earnings per share of $1.50.

  What is the annual depreciation and the carrying amount

The company uses the straight-line method of depreciation. What is the annual depreciation and the carrying amount at December 31, 2018

  What is aws and what services are provided

What is AWS and what services are provided? Investigate online and report back on the costs associated with key services such as EC2 and S3.

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