A property that produces a level ofNOI of $200,000 per year is expectedto be sold in year 5 for $2,000,000. Ifthe property was purchased for$2,000,000, what percent of the IRRcan be attributed to the operatingincome only?

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Answered: $2,000,000, what percent of the IRR can…

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$2,000,000, what percent of the IRR can be attributed to the operating income only?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A property that produces a level of
NOI of $200,000 per year is expected
to be sold in year 5 for $2,000,000. If
the property was purchased for
$2,000,000, what percent of the IRR
can be attributed to the operating
income only?

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Step 1: Calculate rate of return

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Step 2: Calculate Present Value of NOI

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Step 3: Calculate Internal Rate of Return

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