You are considering the purchase of real estate that will provide perpetual income that should average $50,000 per year. How much will you pay for the property if you believe its market risk is the same as the market portfolio's? The T-bill rate is 5 percent and the expected market return is 125 percent
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- You are considering the purchase of real estate that will provide perpetual income that should average $54,000 per year. How much will you pay for the property if you believe its market risk is the same as the market portfolio’s? The T-bill rate is 6%, and the expected market return is 9.0%. Property Value =Dog You are considering the purchase of real estate that will provide perpetual income that should average$61,000 per year. How much will you pay for the property if you believe its market risk is the same as themarket portfolio%u2019s? The T-bill rate is 3%, and the expected market return is 12.5%.Consider an asset that costs $120 today. You are going to hold it for 1 year and then sell it. Suppose that there is a 25 percent chance that it will be worth $100 in a year, a 25 percent chance that it will be worth $115 in a year, and a 50 percent chance that it will be worth $140 in a year. What is its average expected rate of return? Next, fifi gure out what the investment’s average expected rate of return would be if its current price were $130 today. Does the increase in the current price increase or decrease the asset’s average expected rate of return? At what price would the asset have a zero rate of return?
- You are considering an investment that will pay you $1,200 in two year, $2,400 in three years and $3,600 in four years. If investors require a return of 8%, what price should it sell for?An investor has to decide how much he will be willing to pay for an investment that generates the following stream of future cash flows: Yr1 = 35, Yr2 = 40, Yr3 = 45, Yr4 = 50, Yr5= 55. His minimum required rate of return is 9 percent. How much should he be willing to pay for it today?You have an investment opportunity that requires an initial investment of $5,000 today and will pay $6,000 in one year. What is the rate of return of this opportunity? The rate of return for this opportunity is ____%.
- You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $500 one year from now, $1,500 two years from now, and $10,000 ten years from now. a. What is the NPV of the investment opportunity if the interest rate is 8% per year? Should you take the opportunity? b. What is the NPV of the investment opportunity if the interest rate is 4% per year? Should you take the opportunity? a. What is the NPV of the investment opportunity if the interest rate is 8% per year? The NPV of the investment opportunity if the interest rate is 8% per year is $. (Round to the nearest dollar.) Should you take the investment opportunity (Select the best choice below.) A. Reject it because the NPV is less than 0. B. Take it because the NPV is equal to or greater than 0. b. What is the NPV of the investment opportunity if the interest rate is 4% per year? The NPV of the investment opportunity if the interest rate is 4% per year is $ (Round to the nearest dollar.) Should…Your broker has offered you an investment opportunity at a cost of $ 500. The opportunity offers $100 in 1 year, $200 in 2 years, and $300 in 3 years. If you require a 10% return on investments of similar risk, should you take the opportunity?(Use Calulator or Formula Approach) Your broker calls you and tells you that he has this great investment opportunity. If you invest $100 today, you will receive $40 in one year and $75 in two years. If you require a 15% return on investments of this risk, should you take the investment?
- You are considering investing in a real estate project. Your one ownership unit would cost $ 30,000. The project is expected to generate annual cash flows for you of $4,500 in year 1, $5.000 in years 2-5. $8,000 in year 6 and $19,000 in year 7. With a discount rate of 5.0%, what is the net present value (NPV) of this investment? Should you invest in this deal? Whyor why not? Please provide the proper keystrokes for the BAIIPlus and the Qualifier Plus IIIfx calculators. Thank you!You are researching interest rates and their forecasts. Your research provides you with the following: 1-year rate = 6% 2-year rate = 6.125% 3-year rate = 8.5% 1-year rate, 2 years from now = 6.5% Assuming you can borrow $1 million, can you use this interest rate information to earn some risk-free profit. if yes, compute the profit. Show detailed workings. Assume that the pure expectations theory applies.You have the opportunity to make an investment that costs $1.000,000. If you make this investment now, you will receive $250,000 one year from today, $200,000, $150,000 and $ 400,000 two and three years from today, respectively. The appropriate discount rate for this investment is 11 percent Should you make the investment? What is the net present value (NPV) of this opportunity?