Customer Service Chat
Get quote & make Payment
Real Estate Finance, Financial Management
1. Consider the following cash flows and reversion:
There is an $80,000 cash outflow at time zero. BTCFs for years 1-4, respectively, are $10,000, $20,000, $20,000, and $25,000. BTER for year 4 equals $50,000.
A) Calculate the NPV of equity if the required rate of return equals 10%.
B) Recalculate the NPV of equity if the required rate of return equals 15%.
C) Calculate the internal rate of return.
D) Should all investors accept this project?
2. Consider the following cash flows and reversion:
BTCFs for years 1-6, respectively, are $10,000, $10,500, $12,000, $11,000, $13,000, and $10,000. BTER for year 6 equals $140,000. What is the maximum that the investor can pay to earn a 15% rate of return?
3. Consider an apartment complex investment with a $500,000 purchase price. On a before-tax basis, should the investor buy the project? Why or why not?
A. First year’s gross rents = $500 per unit per month; there are 20 units
B. Vacancies and bad debts are expected to be 7% of PGI
C. First year’s operating expenses = $48,000
D. LTV ratio = 80% on a 10% mortgage for 25 years with monthly compounding
E. Depreciable basis = 85% of the purchase price
F. Future sale price = $550,000
G. Holding period = 60 months
H. Marginal tax rate = 28%; Capital gains rate = 15%
I. Require rate of return = 16%
J. Growth rates: Gross rents = 5% per year; Operating expenses = 5% per year
K. Financing costs = $16,000; Acquisition costs = $0
L. Prepayment penalty = 6%
Problem Set #3: The Refinance Decision
Five years ago you originated a $50,000 mortgage loan at 12% for 30 years with monthly compounding. Because rates are currently 10%, you are considering refinancing the unpaid mortgage balance of your existing loan for 25 years with monthly compounding. Your current loan has a 2% prepayment penalty and the new lender will charge you $1,000 in refinancing costs. Assume your opportunity cost of capital equals 12%. Should you refinance if the new loan is held to maturity?
Posted Date: 10/29/2012 11:37:18 AM | Location : United States
Ask an Expert
Real Estate Finance, Assignment Help, Ask Question on Real Estate Finance, Get Answer, Expert's Help, Real Estate Finance Discussions
Write discussion on Real Estate Finance
Your posts are moderated
Write your message here..
What do you mean by shares, Q. What do you mean by Shares? Shares: issu...
Q. What do you mean by Shares? Shares: issue of the share is the most important source of the long terms capital. A company can issue various type of the share as the equity an
Payback period, Payback Period It is an amount of time, mainly measured...
Payback Period It is an amount of time, mainly measured in years; it takes previously the undiscounted cash inflows from a project equal the cash outflow. It indicates the leng
Commercial paper, What is Commercial Paper? Please provide me report on Est...
What is Commercial Paper? Please provide me report on Estimation of Commercial Paper. It is about 2000 words count report on topic Commercial Paper.
Define the term- earnings per share, Define the term- Earnings per share (E...
Define the term- Earnings per share (EPS) EPS = Profit available to ordinary shareholders (PAT) / Weighted average number of shares in issue(p per share) This ratio illustra
Risk return relationship, RISK RETURN RELATIONSHIP A business operates...
RISK RETURN RELATIONSHIP A business operates in a market environment, which is not within its control. It is exposed to several dangers from the internal with external sources
Current assets, A firm has $700 in inventory, $600 in fixed assets, $600 in...
A firm has $700 in inventory, $600 in fixed assets, $600 in accounts receivables, $800 in accounts payable, and $50 in cash. What is the amount of the present assets?
Analysis of financial plans, Part 1: Contingency plan Create contingency pl...
Part 1: Contingency plan Create contingency plans for the following scenarios: > One of your highly qualified consultants has given three months notice and is planning to move to a
Explain the tests of controlor systems based auditing, Tests of controlor s...
Tests of controlor systems based auditing Tests to obtain audit evidence about effective operation of the accounting and internal control systems. It isn't concerned about deta
Caselet, 1.How would you judge the potential profit of Bajaj Electronics on...
1.How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit? 2. Suggestion regarding C
Investment consultant , Suppose, you are working as an investment consultan...
Suppose, you are working as an investment consultant in a consultancy firm and most of your clients are habitual investors, who are maintaining their own portfolios comprising of v
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
IT Courses and Help
Why Us ?
~24x7 hrs Support
~Quality of Work
~Time on Delivery
~Privacy of Work
Human Resource Management
Literature Review Writing Help
Follow Us |
T & C
Copyright by ExpertsMind IT Educational Pvt. Ltd.