Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from löday. The aHU The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Year 3 Cost Today $1,020,000 Parkside Acres $520,000 1,470,000 870,000 Real Property Estates Lost Lake Properties 510,000 910,000 20,000 220,000 Overlook Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose? The profitability index for Parkside Acres is - (Round to two decimal places.)
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- Kartman Corporation is evaluating four different real estate investments Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 13%. The following table summarizes the initial cost and the sale price in three years for each property Cost Today Sale Price in Three Years Parkside Acres $460.000 $860.000 Real Property Estates 830,000 1,370,000 Lost Lake Properties 650,000 1,050,000 Overlook 180,000 400,000 Kartman has a total capital budget of $830,000 to invest in properties. Which properties should it choose? The profitability index for Parkside Acres is (Round to two decimal places)Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 15%. The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Three Years Parkside Acres Cost Today $470,000 860,000 $930,000 Real Property Estates 1,420,000 Lost Lake Properties 680,000 1,080,000 Overlook 170,000 350.000 Kartman has a total capital budget of $860,000 to invest in properties. Which properties should it choose? The profitability index for Parkside Acres is (Round to two decimal places.)Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 15%. The following table summarizes the initial cost and the sale price in three years for each property: Parkside Acres Real Property Estates Lost Lake Properties Overlook Cost Today $430,000 810,000 660,000 180,000 The profitability index for Parkside Acres is Sale Price in Three Years $850,000 1,410,000 1,100,000 360,000 Kartman has a total capital budget of $810,000 to invest in properties. Which properties should it choose? (Round to two decimal places.)
- An investor is considering the acquisition of a "distressed property" which is on Northlake Bank's REO list. The property is available for $200,800 and the investor estimates that he can borrow $160,000 at 4.5 percent interest and that the property will require the following total expenditures during the next year: Inspection Title search Renovation Landscaping Loan interest Insurance Property taxes Selling expenses Required: a. The investor is wondering what such a property must sell for after one year in order to earn a 20 percent return (IRR) on equity. b. The lender is now concerned that if the property does not sell, investor may have to carry the property for one additional year. He believes that he could rent it (starting in year 2) and realize a net cash flow before debt service of $1,440 per month. However, he would have to make an additional $7,440 in interest payments on his loan during that time, and then sell. What would the price have to be at the end of year 2 in order…An investor is considering the acquisition of a “distressed property” which is on Northlake Bank’s REO list. The property is available for $203,400 and the investor estimates that he can borrow $160,000 at 4.5 percent interest and that the property will require the following total expenditures during the next year: Inspection $ 551 Title search 1,102 Renovation 13,000 Landscaping 902 Loan interest 7,251 Insurance 1,851 Property taxes 6,051 Selling expenses 8,000 Required: a. The investor is wonderinCaddis Company acquired a building with a loan that requires payments of $19,000 every six months for 3 years. The annual interest rate on the loan is 8%. What is the present value of the building? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice O O O O $99,600 $114,000 $38,988 $65,402 $48,965
- You have been asked to estimate the market value of an income-producing property. The table below provides 5 years of projected cash flows for the property. Use the discounted cash flow approach to income valuation to calculate the market value. Assume that you sell the property at the end of year 5 and that the net proceeds from the sale are $5 million. Also assume that the discount rate is 10%. PGI EGI NOI Year 1 $4.18 million $750,000 $780,000 $811,200 $637,500 $663,000 $689,520 $318,750 $331,500 $344,760 $6.11 million $4.12 million Year 2 $4.40 million Year 3 Year 4 $843,648 $717,101 $358,550 Year 5 $877,394 $745,785 $372,892Optimum Properties Corp. is considering the construction of a 50-unit condominium near the University Belt area. The 15-year investment study shows the following data: Disbursements Revenue Land P8000 000.00 Land, after 15 yrs P43 000 000.00 Building 25 000 000.00 Bldg, after 15 yrs 8600 000.00 300 000.00 Maintenance/yr Insurance & Tax/yr Rent/unit-yr 120 000.00 1.2% With an estimated occupancy rate of 92% at all times, validate the acceptability of the project using the IRR method. The company applies a 15% MARR on its investments (Ans. Project is acceptable, 15.7%)The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 $18,750 18,750 18,750 18,750 18,750 The average rate of return for this investment 3 4 Operating Income 5 Net Cash Flow $93,750 93,750 93,750 93,750 93,750
- The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 3 4 5 Income from Operations $18,750 18,750 18,750 18,750 18,750 Net Cash Flow $93,750 93,750 93,750 93,750 93,750 The present value index for this investment is Oa. 0.95 Ob. 1.00 Oc. 1.05 Od. 1.25After 10 years 2 properties flat 1 and flat 2 are sold. Their value has increased at an annual rate of 2.67% p.a. and capital gains taxes (CGT) are paid at a rate of 19% on the capital gains. The initial properties flat 1 and flat 2 were purchased by the investor for 450000 and 150000. a) what formulas would i use to calculate the final price of the properties after 10 years with the increase annual rate taken into consideration and what value do you get b) compute the NPV of the sale of each of the 2 flats , after capital gains taxes could you please explain what formuals i would use here and what method i should follow, not necessarily a value for b as not all the data in my spreadsheet i can attachEstimate the value of the property using the income approach based on the following facts: Net operating income annually for next 3 years is $400000 At end of three years, property is sold with an existing cap rate of 10% and a commission of 4% on sale The discount cap rate is the same as the existing cap rate and the operating income is assumed to be received at year end