You have decided that you will sell off your house, which is currently valued at $300,000, at a point when it appreciates in value to $540,000. If houses are appreciating at an average annual rate of 5% in your neighborhood, for approximately how long will you be staying in the house?
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You have decided that you will sell off your house, which is currently valued at $300,000, at a point when it appreciates in value to $540,000. If houses are appreciating at an average annual rate of 5% in your neighborhood, for approximately how long will you be staying in the house?
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- A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
- You are considering buying a condo as an investment property. The condo will generate $20,000 a year for 10 years in rent, after which you expect to sell the property for $275,000. What is the maximum you should pay for the property if your cost of money is 7%?Imagine that you are trying to evaluate the economics of purchasing a condominium to live in during college rather than renting an appartment. If you buy the condo, during each of the next 4 years you will have to pay property taxes and maintenance expeditures of about $6,000 per year, but you will avoid paying rent of $10,000 per year. When you graduate 4 years from now, you expect to sell the condo for $125,000. If you buy the condo, you will use money you have saved and invested earning a 6% annual return. Assume that all cash flows (rent, maintenance, etc.) would occur at the end of each year. a. Identify the cash flows, their timing, and the required return applicable to valuing the condo. The amount of the property taxes and maintenance expenditures, CF, associated with the purchase of the condo is $_________. b. What is the maximum price you pay for the condo? Explain.Please Show me the calculations!! A real estate investor is considering the purchase of an apartment building that currently provides income of $30,000 and is expected to grow in income by 3% for the next 4 years. You would receive income from today, year 0, through year 4. At the end of year 4, they expect to sell the property for $800,000. The investor has a discount rateof 6%. How much should an investor be willing to pay for this property?
- You are thinking about buying a house.You find one you like that costs $200,000. You learn that your bank will give you a mortgage for $160,000 and that you would have to use all of your savings to make the down payment of $40,000. You calculate that the mortgage payments, property taxes, insurance, maintenance, and utilities would total $950 per month. Is $950 the cost of owning the house? What important factor(s) have you left out of your calculation of the cost of ownership, if any?You are thinking about buying a rental property. Because of the difficulty getting a loan, you are going to pay $350,000 in cash for the house today. You think you can rent out the property for the next 10 years, receiving $1,400 in cash each month after your expenses and taxes. At the end of ten years, you believe you will be able to sell the property for $425,000. If your discount rate is 7.2% annually with monthly compounding, what is the NPV of the rental property? (Assume first payment is 1 month from today)I purchased a house and intend to hold the property indefinitely. I plan to rent the house to generate rent income. The first year’s rent is $15,000, and will grow it at the rate of 10% for 3 years after that. After the initial 4 years, the growth rate in the rent will stabilize at 5%. The maintenance will cost $5,000 a year. The appropriate discount rate is 20%. a. What is the present value of rent income? b. What is the present value of the house? c. What is the present value of maintenance costs?
- An apartment will generate $8,000 a year for 5 years, after which you expect to sell the property for $100,000. What is the maximum you should pay for the property if your cost of money is 10% ?imagine that you are to evaluate the economics of purchasing a condominium to live in during college rather than renting an apartment. if you buy the condo , during each of the next 4 years you will have to pay property taxes and maintanance expenditure of about $6,000 pe year, but you will avoid paying rent of $10,000 per year. when you graduate 4 years from now, you expect to sell the condo for $125,000 after taxes. if you buy the condo, you will use money you have saved that is currently invested and earning a 4% annual after tax rate of return. assume for simplicity that all cash flows (rent,maintainance, etc) would occur at the end of each year . a. draw a time line showing the cash flows,their timing, and the required return applicable to valuing the condo. b. what is the maximum price you would be willing to pay to acquire the condo ? explain .An apartment building in your neighborhood is for sale for $175,000. The building has four units, which are rented at $550 per month each. The tenants have long-term leases that expire in 7 years. Maintenance and other expenses for care and upkeep are $9500 annually. A new university is being built in the vicinity and it is expected that the building could be sold for $198,000 after 7 years. What is the internal rate of return for this investment?
