Your friend is considering buying a property for Sh, 50,000. If purchased the property will be financed 60% by debt at 15% p.a. payable monthly for 5 years. The property will generate NOI of Sh, 5,000 and Sh, 8,000 in year 1 and 2 respectively. The property can be sold for Sh, 60,000 at the end of year 2. The required rate of return is 25%. Calculate the BTIRR and advise.
Q: First of all, calculate your initial monthly payment for this loan based on the teaser rate.…
A: Loan amount = 120,000 x 75% = $90,000Number of months n = 30 x 12 = 360Monthly rate = 3.25 / 12 =…
Q: Suppose yoU want to buy a new house. You currently have $15,000, and you figure you need to have a…
A: Cost of house is $150,000 Interest rate is 7.5% Current amount we have is $15000 Down payment 10%…
Q: Herb E. Vore is considering investing in a Salad Stop franchise that requiresan initial outlay of…
A: a) I concur with Herb since the franchisor neglecting the time-value of money and in case Herb did…
Q: You are considering buying a condo as an investment property. The condo will generate $20,000 a year…
A: Maximum you should pay for the property is the present value of future cashflows
Q: You are considering the purchase of real estate that will provide perpetual income that should…
A: Present value of a perpetual cash flow is the current worth of a cash flow continuing till…
Q: 1. You decide to give SCU an endowment that will pay out $50 K per year forever, with a continuously…
A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…
Q: An investment will generate $9,000 a year for 20 years. If you can earn 9 percent on your funds and…
A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…
Q: The annual income from an apartment house is $20,000. The annual expense is estimated to be $2000.…
A: Given:
Q: You have agreed to make investment in your friends agricultural farm. This would require an amount…
A: Future Worth (FW) is the techniques used to ascertain the acceptability of available investment…
Q: d.$35,000
A: Answer is b.30000
Q: It is estimated that a timber tract will yield an annual profit of P100,000 for 6 years, at the end…
A: The value of an asset purchased should be on par with its future profits and expected return. Thus,…
Q: r another 4 years. At the end of the 7th year, Jenna expects to sell the investment for $25,000. If…
A: The given problem can be solved using NPV function in excel.
Q: Your firm has a potential project that will cost $5,000 now to begin. The project will then generate…
A: NPV means PV of net benefit arises from the future. It can be simple calculated by taking difference…
Q: You are looking to purchase a house for $196,000. If you put 20% down and finance the rest, what…
A: Monthly payments are fixed periodic payments that are made by borrower to the lender.
Q: You have three options to choose for an investment: (1) Pay 15,000 and you will receive P20,000…
A: We need to find the rate of return for all the three options Let r = Rate of return
Q: You are offered an investment that will pay •$200 in year 1, •$400 the next year, •$600 the…
A: Time value tells that value received today is of more value than that of receiving the exact value…
Q: How much would you be willing to pay for this investment if you required a 12 percent rate of…
A: Present Value of Annuity: It represents the present worth of the future annuity stream of cash…
Q: roy gross is considering an investment that pays 7.6%, compounded annually. How muchwill he have to…
A: We need to use the concept of time value of money to solve the question. According to the concept of…
Q: You have been offered an investment opportunity that pays $600 every quarter for nine years and…
A: Current value is the present value of the future payments at a given rate of return. Given:…
Q: You have an opportunity to purchase a piece of vacant land for $30,000 cash. If you plan to hold it…
A: Future value refers to the value of the amount to be received in lump sum in the future or in…
Q: An investor can make an investment in a real estate development and receive an expected cash return…
A:
Q: lan is considering investment online publishing company and needs to work out the present value. He…
A: Following details are given in the question : Future value of cashflow = $100000 Time period = 4…
Q: You plan to buy some undeveloped land that should sell for $126,000 in ten years. What is the most…
A: Given: Future value (FV) =$126000No. of years (n)=10 yearsRate of return /interest (r)=18%
Q: Mitchell Investments has offered you the following investment opportunity: $7,000 at the end of…
A: Here, $7,000 at the end of each year for the first 7 years, plus $5,000 at the end of each year from…
Q: How much would you be willing to pay for this investment if you required a 8 percent rate of return?…
A: Value of an investment is the discounted value of cash flows, at the rate of required rate of…
Q: An investor has an opportunity to buy a commercial property and to sell it after 15 years. Rents…
A: Holding Period = 15 years Rent = 24000 Annual Increase in rent = 3% Required Return = 12% He…
Q: The payback period of a project that costs $1,000 initially and promises after-tax cash inflows of…
A: Here, Cash Inflow is $3000 each year Initial Investment is $1,000
Q: Project A costs $5,200 and will generate annual after-tax net cash inflows of $1,700 for five years.…
A: Net Present Value Net present value is a method of capital budgeting that are used to measure the…
Q: You plan to buy some undeveloped land that should sell for $285,000 in seven years. What is the most…
A: In this question we need to calculate the most you can pay for the undeveloped land which has future…
Q: You are offered to spend P500,000 on a certain project that promises to yield yearly benefit of…
A: Under cost benefit analysis, present value of the benefits from the project are compared with the…
Q: You plan to buy some undeveloped land that should sell for $180,000 in three years. What is the most…
A: Present Value: The term present value is defined as the current or present day’s value of the amount…
Q: Puan Jasmin is considering a project that requires an initial investment of RM120,000 and this is a…
A: The payback period is the time to recover the cost of investment. Simply said, it is the amount of…
Q: Angel Rowe wants to receive $5,000 each year for the next 20 years. Assume a 8% interest rate…
A: Annuity payments are a series of regular payments that an investor makes into an investment account…
Q: nvestor feels that the cash flow from a property will enable his to pay a lender Rs. 15,000 per…
A: The given problem can be solved using PV function in excel. PV function computes loan amount for…
Q: Margaret has a project with a $28 000 first cost that returns $5000 per year over its 10-year life.…
A: A method of capital budgeting that helps to evaluate the time period a project requires to cover its…
Q: Ken Francis is offered the possibility of investing $2,745 today; in return, he would receive…
A: Interest rate: It can be defined as the percent of the principal loan balance, charged by the lender…
Q: Solve by using the sinking fund or amortization formula. Betty Price purchased a new home for…
A: Sinking fund is the method where interest payment would be paid semi annually, In this we repay the…
Q: An investment will generate $12,000 a year for 30 years. If you can earn 12 percent on your funds…
A: Question is based on the concept of Annuity
Q: Suppose you plan to buy the Blacklist Company by investing Php 5,000 every year to an investment…
A: The future value function or concept can be used to determine the future value of a present sum or…
Q: Manny Kurr is considering the purchase of a beauty salon. The initial costof this purchase is…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: You want to create an endowment income of $35,000 per year for Oxfordshire Charity, bit the first…
A: The amount that should be invested today is the present value of all future endowment payments.…
Q: Your group receives a phone proposal to invest in a new business. Thecaller informs you that it will…
A: The question gives the following information:
Q: Cromwell is acquiring some land for $1,200,000 in exchange for semiannual payments of $75,000 at an…
A: Given: Land value (PV)= $1,200,000 Payments(PMT) = $75,000 Interest rate (I/Y) = 6.35%
Q: nger finds herself with an extra $5,000 at the end of the year. Calculate the annual rates of return…
A: A rate of return (ROR) is that the internet gain or loss of an investment over a specified time…
Your friend is considering buying a property for Sh, 50,000. If purchased the property will be financed 60% by debt at 15% p.a. payable monthly for 5 years. The property will generate NOI of Sh, 5,000 and Sh, 8,000 in year 1 and 2 respectively. The property can be sold for Sh, 60,000 at the end of year 2. The required
Step by step
Solved in 2 steps with 2 images
- You are considering the purchase of a property today for $400,000. You plan to finance 60.00% of the purchase price with a loan. The appreciation rate on the property value is expected to be 5.00% annually for the next three year Calculate the EAHE. please work it out in excelYou are conducting an investment analysis (before tax) for a hotel in Lausanne assuming a 5 year investment horizon. You have estimated the Property Before Tax Cash Flow (PBTCF), net sales proceeds, and interest payment as shown in the table below. The net transaction price is CHF15'000'000. You take out a 5 year interest-only loan with an annual interest rate of 3.5%. The property discount rate (i.e., Weigthed Average Cost of Capital) is 8%. Ignore transaction costs. Calculate the Net Present Value (NPV: leveraged) for an equity investor. (Hint: use the debt amount and equity amount calculated to calculate the debt-to-equity ratio) Year O Year 1 Year 2 Year 3 PBTCF Net Sales Proceeds - Interest Payment a) 324'041 CHF b) 2'344'957 CHF c) -851'492 CHF d) Impossible to calculate 1'100'000 1'122'000 1'144'000 -350'250 -350'250 -350'250 Year 4 1'166'000 -350'250 Year 5 1'190'000 16'150'000 -350'250You are looking to invest in a real-estate property to rent out that will cost $100,000. The property is expected to produce annual rent cash flows of $9,000 in Year 1, $7,400 in Year 2, and $8,800 in Year 3, at which point you will sell the property for $91,000.00, if your bank quotes you a mortgage rate of 5.25% per year what is the dollar return you can expect on your investment? Additionally, should you buy the property? a. 2,911.06, do not buy the property b. -$787.99 buy the property c. 787.99, buy the property d. -2,911.06, buy the property
- A real estate property is on the market. You have estimated it will give you net cash flows of $5353 per month. You hope to sell it in 7 years for $334380. Your required return is 9.24%, how much should you be willing to pay for the property today? Answer:Assume the annual effective interest rate is i = 2%. An individual wants to invest a capital of £100,000 and is contemplating two projects:Project A. She buys a property for exactly £100,000 at time t = 0 that will generate income from rent. a)If rent is paid monthly in advance and each payment is £700, how long will it take before the present value of rental payments exceeds the initial cost of purchasing the property? b)To be more realistic assume that rent increases every three years at a rate of 1% effective per annum compound, and taxes are paid at 20% on rental income. Moreover, maintenance work for the property will cost £1,500 to be paid at the end of every 5 years (and these are not subject to tax relief). If rental payments stop after 15 years, what is the net present value (at time t = 0) of all cash flows for 15 years? (Include maintenance costs paid at t = 15 years.)there is a house on sale for $800,000. You believe you can finance the home for $500,000 for 20 years at a 2% interest rate. What would the monthly principle and interest payment be for the acquird loan? Calculate using the PV funtion in excel.
- An investment will generate $9,000 a year for 20 years. If you can earn 9 percent on your funds and the investment costs $100,000, calculate the present value of investment. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it?-Select-YesNoItem 2 Calculate the present value of investment, if you could earn only 5 percent. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it in this case?-Select-YesNoA real estate investor feels that the cash flow from a property will enable his to pay a lender Rs. 15,000 per year, at the end of every year, for 10 years. How much should the lender be willing to loan her if he requires a 9% annual interest rate ? Use excelAn investment offers to pay you $10,000 a year for four years. If it costs $27,980, what will be your rate of return on the investment? Use Appendix D to answer the question. Round your answer to the nearest whole number.
- An investment will generate $12,000 a year for 30 years. If you can earn 12 percent on your funds and the investment costs $100,000, calculate the present value of investment. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it?-Select-YesNoItem 2 Calculate the present value of investment, if you could earn only 9 percent. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it in this case?You plan to purchase a rented house which you could rent to earn you an annual income of $12,000. The expected annual expenses of the house are $3,000. You plan to sell the house for $145,000 at the end of ten years .a. Draw a cash flow diagram for this investment if you consider 18% to be a suitable interest rateb. Determine how much you could afford to pay for it now.An investment offers to pay you $8,000 a year for five years. If it costs $28,840, what will be your rate of return on the investment? Use Appendix D to answer the question. Round your answer to the nearest whole number. %