Determining the resulting in equity

Assignment Help Finance Basics
Reference no: EM131071793

An apartment project that an investor is considering for purchase is projected for purchase is Projected to have NOI of $100,000 during the first year .After that the NOI is projected to increase 3 percent per year .The property can be purchased for $1 million. This price includes a building value of $900,000, which will be depreciated over 27.5 years. The property value is projected to increase 3 percent per year over a five year holding period. The Investor is in 28 percent tax bracket for ordinary income and capital gains. The land can be sold for $100,000 and leased back at the annual payment of $7800 per year for 25 years. The building would be financed for $630,000 at a 10% rate at 15 year term. The amount of equity invested is therefore equal to the purchase price of one million less the amount of loan and sale value of the land, resulting in equity of $270,000. Advice whether the developer can prefer the leasing or not provided his expected income after the tax will be 15%. Show the necessary workings.

Reference no: EM131071793

Questions Cloud

Research papers for a university-level audience : This course develops the skills used in writing applied research papers for a university-level audience. Students will write position papers, persuasive essays, and case study analyses. Students will study classical rhetorical concepts of authorit..
How harm reduction is or should be utilized to decrease risk : Can you think of any other high-risk health behaviors and how harm reduction is or should be utilized to decrease risk and poor outcomes? Is there a particular vulnerable population not discussed where harm reduction could improve outcomes?
Develop a market assessment for the business : Develop a 1,050- to 1,400-word Marketing Plan for the business you have chosen. Address the following in your paper:
Associated with being a participant in the court process : Read the article "For Domestic Violence Survivors, Family Court Becomes Site of Continued Abuse". Describe the potential traumas associated with being a participant in the court process.
Determining the resulting in equity : The amount of equity invested is therefore equal to the purchase price of one million less the amount of loan and sale value of the land, resulting in equity of $270,000. Advice whether the developer can prefer the leasing or not provided his..
Discuss real examples of companies : 1. Identify and discuss real examples of companies with a competitive advantage based on customer lock-in as opposed to product innovation. Which do you expect to sustain a high ROIC for a longer time?
Variance of the return to the whole portfolio : (a) Assuming Cov(RA, RB) = -50, calculate the mean and the variance of the return to the whole portfolio. (b) Assuming that the covariance between the two assets is at its maximum possible value, calculate the return to the whole portfolio.
The support and empowerment of a particular group : 1. Are you a member of a student organization dedicated to the support and empowerment of a particular group, whether osocial, cultural, religious, or major-based (e.g. English or Business Honor Society)?
Optimal amount of cash balance for a firm : Explain any 5 factors to be considered when determining the optimal amount of cash balance for a firm.

Reviews

Write a Review

Finance Basics Questions & Answers

  Visit the corporate website of nestleacute one of the most

1. visit the corporate website of nestleacute one of the most multinational companies in the world or you can pick any

  Will samonne be able to transfer her account balance

Samonne may transfer her pension account balance to some other account provided the balance is 425,000 or less. Will Samonne be able to transfer her account balance?

  Estimated beta of stock of a company

The stock of Eastman Kodak has an estimated beta of 1.6. How would you interpret this beta value?  How would you evaluate the firm's systematic risk?

  Retirement benefits and pension plans for a person

Mr. Horace, aged 25, has $25,000 cash to invest for his retirement. In addition, he plans to save and invest $8,000 per year (at the end of every year) for the next 40 years

  Todd is able to pay 360 a month for 6 years for a car if

todd is able to pay 360 a month for 6 years for a car. if the interest rate is 6.7 percent how much can todd afford to

  What is the present value of the cash flows

If the apporpiate discount rate for the following cash flows is 9 percent compounded quarterly, what is the present value of the cash flows?

  Calculate the required rate of return for management inc

calculate the required rate of return for management inc. assuming that investors expect a 5 rate of inflation in the

  Calculate the current stock price

Assume that the long-term growth rate (g) is 2% and the dividend next year (D1) is $90 per share. Also, assume that Riskfree rate (Rf) = 4%, Expected market return

  Expected return on the market

The Covariance between these two stocks is -.001. The expected return on the market is .15 with a standard deviation of .15. The risk free rate is .03. You can borrow and lend at this risk free rate.

  Explain the differences showing appropriate calculations

There is also the option of taking an annuity, which would be one equal payment each year for 30 years. Explain the differences showing appropriate calculations. Do not consider taxes at this time. Include your opinions.

  By how much would the roe have changed

Has it cut costs and increased its net income in this amount, by how much would the ROE have changed?

  Calculate the amount for investment

A financial advisor tells you that you can make your child a millionaire if you just start saving early. You decide to put an equal amount every year into an investment account that earns 8 percent interest per year, beginning on the day your child i..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd