Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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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
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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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