1. You are considering the purchase of an apartment building with the following information: Purchase price Expected year 1 NOI Expected annual NOI growth Expected Exit Cap Rate Holding Period $12,500,000 $1,000,000 4% 8.5% 3 years Solve for each of the following: Initial (going in) cap rate Expected sales price end of year 3 Net Present Value at 9% Discount Rate IRR Would you buy this asset for $12,500,000? Why or why not?

1. You are considering the purchase of an apartment building with the following information: Purchase price Expected year 1 NOI Expected annual NOI growth Expected Exit Cap Rate Holding Period $12,500,000 $1,000,000 4% 8.5% 3 years Solve for each of the following: Initial (going in) cap rate Expected sales price end of year 3 Net Present Value at 9% Discount Rate IRR Would you buy this asset for $12,500,000? Why or why not?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 9EB: If you invest $15,000 today, how much will you have in (for further instructions on future value in...

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