Considering the acquisition-net operating income

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You are considering the acquisition of a $1.8m apartment building that you anticipate will produce $167,000 per year in net operating income (NOI) that you will sell after 5 years for $2m. 

a. What is the unlevered IRR of the investment? 

b. What is the levered IRR of the investment with a $1m interest-only (IO) loan at 5% ($50,000 per year, $1m due to lender when sell property)? 

c. What is levered IRR of the investment with a $1m IO loan at 15% ($150,000 per year, $1m due to lender when sell property)?

Reference no: EM13908763

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