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Years Purchase Price Unleveraged Cash Flow Resale Price Total CF (12,000,000) (12,000,000) 0 1 640,000 670,000 640,000 670,000 2 3 685,000 700,000 10,500,000 11,185,000 700,000 4

Years Purchase Price Unleveraged Cash Flow Resale Price Total CF (12,000,000) (12,000,000) 0 1 640,000 670,000 640,000 670,000 2 3 685,000 700,000 10,500,000 11,185,000 700,000 4

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The following proforma shows unleveraged cash flows for a property if an investor were to purchase it today and resell it at the end of the third year: (Show answer in Excel)

  • What is the present value of the each of the discounted cash flows from Year 1, Year 2, and Year 3, using a discount rate of 8.75% (hint: calculate each on separately)?
  • What is the Net Present Value of this investment?
Years Purchase Price Unleveraged Cash Flow Resale Price Total CF (12,000,000) (12,000,000) 1 640,000 670,000 640,000 670,000 2 3 685,000 700,000 10,500,000 11,185,000 700,000
Transcribed Image Text:Years Purchase Price Unleveraged Cash Flow Resale Price Total CF (12,000,000) (12,000,000) 1 640,000 670,000 640,000 670,000 2 3 685,000 700,000 10,500,000 11,185,000 700,000
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