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- D4) Bob buys a property that costs $1,000,000. The property is projected to generate NOI as follows: Year NOI 1 $100,000 2 $105,000 3 $110,000 Bob will own the property for two years. Bob will sell the property at the end of year 2 at a cap rate that is 250 basis points lower than the cap rate at which he bought the property. What is Bob’s annualized IRR for the investment in question A. 26.21% B. 14.89% C. 30.47% D. 27.78%Bob buys a property that costs $1,000,000. The property is projected to generate NOI as follows: Year NOI 1 $100,000 2 $105,000 3 $110,000 Bob will own the property for two years. Bob will sell the property at the end of year 2 at a cap rate that is 250 basis points lower than the cap rate at which he bought the property. Assume Bob finances his purchase with a 50% LTV Fixed Rate IO loan at an annual rate of 5% with annual compounding and annual payments. What is Bob’s annualized IRR for the investment in question? A. 83.54% B. 52.38% C. 78.93% D. 79.71%1. A house costs P500,400 cash. A purchaser will pay P100,000 cash, P50,000 at the end of 2 years and a sequence of 6 equal annual payments starting with one at the end of 4 years to discharge all his liabilities at 7% compounded annually. Find the annual payment which may be made for 6 years. 2.Mr. Tolentino wants to deposit a lump sum on the day his son is born into an account bearing an interest of 5% compounded annually in order to withdraw P35,000 each on his son's 18th, 19th, 20th and 21st birthdays How much is the lump sum?
- 12–25. Pete Air wants to buy a used Jeep in 5 years. He estimates the Jeep will cost $15,000. Assume Pete invests $10,000 now at 12% interest compounded semiannually. Will Pete have enough money to buy his Jeep at the end of 5 years? PROVIDE THE FOLLOWING FOR EACH PROBLEM N= I= PV= PMT= FV= C/Y= P/Y =Rocky and Adrien are selling their house. Offer #1 puts $8094 down and pays the lump sum $140010 in 3 months. Offer #2 puts $8094 down and pays the lump sum $178520 in 13 months. Assume their money can earn 4% simple interest if invested. What is the larger amount of money worth today (use today as a focal date)?1.A person buys a piece of lot P300,000 downpayment and 8 deferred quarterly payments of P8,000 each, starting 3 years from now . What is the present value of the investment if the rate is 12% compounded quarterly? 2. Mr Dela Cruz is left with an inheritance from his father. He has an option to receive P2.5 M at the end of 10 years, however he wishes to receive the money at the end of each year for 6 years. If interest rate is 8% how much would he receive every year?
- 6) Jia has just won a $20 million lottery, which will pay her $1 million at the end of each year for 20 years. An investor has offered her $10 million for this annuity. She estimates that she can earn 10 percent interest, compounded annually, on any amounts she invests. She asks your advice on whether to accept or reject the offer. What will you tell her? (Ignore Taxes) Policy A: You will receive equal annual payments of $10,000 beginning 35 years from now for 10 years. Policy B: You will receive one lump-sum of $100,000 in 40 years from now. Which policy would you choose? Assume rate of interest is 6 percentType the solutionpls. A man buys a house and lot worth P1M if paid in cash. On the instalment basis he pays P500,000 down payment; P100,000 at the end of one year and P150,000 at the end of two years and the final payment at the end of four years. Find the final payment if interest is 14% per annum.V4. Samantha was supposed to make a payment of $4,250 in 2 years and another payment for $1,300 in 5 years to Loon Company as part of a payment plan. Instead, she is trying to reach an agreement with the company where she would pay an upfront amount now, and an amount of $500 in 4 years. Assume that money is worth 8.58% compounded quarterly. a. Calculate the equivalent value of the $4,250 payment and the $1,300 payment today. B. calculate the size of the payment required in 5 years to Steele the amount
- 13. You can purchase a 10,000 square foot office building for $1,900,000. You can finance your purchase with an 80% loan at 4.675% interest, requiring monthly payments over 25 years. Rents are $24.00 per square foot and expenses are $10.00 per square foot. You project vacancy to be 12% in years 1 and year 2, 8% in year 3 then 6% thereafter. You expect that rents will increase by 6% per year for years 2 and 3, then increase by 4% thereafter. You believe that expenses willincrease at a fixed rate of 5% per year. You expect to sell the building on a 7 cap, based on the following year’s income. For a holding period of 8 years. What is the (BEFORE TAX): Before Tax IRR on Equity ? Before Tax NPV @ 12% ?2 Today James purchased a house and a car worth a combined present value of $390000. To purchase the house, James agreed to pay $60000 down payment and $2100 at the end of each month for 20 years. To buy the car, James was required to pay $6000 down payment and R dollars at the end of each month for 4 years. Determine R if j12 = 12%.5. Kristie owns a perpetuity which pays $12,000 at the end of each year. She comes to youand offers to sell you all of the payments to be received after the 10th year. What is themaximum amount that you should offer her if the required return is 8%?
