Consider an income producing property that according to your assumptions and estimations is currently worth $4M on an unlevered basis when a 7.5% required rate of return is applied. One of the assumptions that you have made when arriving at that estimate is that you will sell the property in 6 years for a CAP of 8%, which translates to $4.4M at that future point in time. a. At what price will you sell the property in 6 years if all your assumptions materialized except that you will sell the property for a CAP of 7% instead of 8%? Show your calculations. b. All other things equal, by how much the situation described in part a affects the current value of the property.

Hi,  You have been approached to buy an investment which will pay you $1,000 at the end of 4years. The investment will also pay you $30 per annum (at the end of each year) as well.How much is this investment worth today? Assume interest rate of 8%How should i approach this? is the $30 per annum included in the PV?Thanks.

YOU ARE A FINANCIAL ANALYST FOR A COMPANY THAT IS CONSIDERING A NEW PROJECT. IF THE PROJECT IS ACCEPTED, IT WILL USE A FRACTION OF A STORAGE FACILITY THAT THE COMPANY ALREADY OWNS BUT CURRENTLY DOES NOT USE. THE PROJECT IS EXPECTED TO LAST 10 YEARS, AND THE ANNUAL DISCOUNT RATE IS 10% (COMPOUNDED ANNUALLY). YOU RESEARCH THE POSSIBILITIES, AND FIND THAT THE ENTIRE STORAGE FACILITY CAN BE SOLD FOR €100,000 AND A SMALLER (BUT BIG ENOUGH) FACILITY CAN BE ACQUIRED FOR €40,000. THE BOOK VALUE OF THE EXISTING FACILITY IS €60,000, AND BOTH THE EXISITING AND THE NEW FACILITIES (IF IT IS ACQUIRED) WOULD BE DEPRECIATED STRAIGHT LINE OVER 10 YEARS (DOWN TO A ZERO BOOK VALUE). THE CORPORATE TAX RATE IS 40%. DISCUSS WHAT IS THE OPPORTUNITY COST OF USING THE EXISTING STORAGE CAPACITY?

You’re trying to choose between two different investments, both of which have upfront costs of K75,000. Investment G returns K135,000 in six years. Investment H returns K195,000 in 10 years. Which of these investments has the higher return?

Future Value You invest $1,000 today and exect to sell the investment for $2,000 in 10 years.  a. Is this a good deal if the investment rate is 6%?  b. What if the interest rate is 10%? Why ? Show the calculations in Excel.

Your firm is considering a number of mutually exclusive choices for a property that you recently acquired. The following are the projected cash flows for one of the projects over its seven-year life. Cash Flows 0 1 2 3 4 5 6 7 (600,000) 100,000 120,000 140,000 160,000 180,000 200,000 220,000 If the appropriate discount rate is 12%, what is the annualized Net Present Value for this option? (Do not round intermediate calculations and enter your answer in dollars with-no decimal places, e.g., 24316.)

Assume you invest $5,100 today in an investment that promises to return $6,928 in exactly 10 years. a. Use the​ present-value technique to estimate the IRR on this investment. b. If a minimum annual return of 9% is​ required, would you recommend this​ investment?       #69 Part 1 a. The IRR of the investment is enter your response here​%. ​(Round to the nearest whole​ percent.) Part 2 b. If a minimum return of 9% is​ required, would you recommend this​ investment?  ​(Select the best choice​ below.)     A. ​No, because this investment yields less than the minimum required return of 9%.   B. ​Yes, because a minimum required return of 9% does not compensate for an investment that lasts longer than one year.   C. ​No, because a minimum required return of 9% is an arbitrary choice for an investment of this risk level.   D. ​Yes, because this investment yields more than the minimum required return of 9%

What is the no arbitrage price of a risk-free investment that promises to pay $1,000 in one year? The risk-free interest rate is 3.5%. If you can purchase the investment for $950, do you have an arbitrage opportunity?

An investor is considering an investment property, but will only pay the price that will result in their desired IRR, given expected cash flows. The property is expected to generate the following cash flows from operations: year 1: $12.000; year 2: $12,600, year 3: $13,230, and year 4: $13,890. Assume that at the end of year 4, the property could be sold to net $190,000. What price must an investor offer to receive an expected IRR of 10%? O $139,518 o $153,396 o $159,752 o $145,254 o $170,522

You are offered an investment with returns of $ 2,213 in year 1, $ 4,670 in year 2, and $ 3,184 in year 3. The investment will cost you $ 6,506 today. If the appropriate Cost of Capital is 7.6 %, what is the Net present Value of the investment?