a) A client wants to purchase a shop as part of an investment portfolio. The shop was let on a 20-year FRI lease, 8 years ago at the rent of €120,000 per annum and is subject to 5-yearly, upwards-only rent reviews. The investor's target (equated yield) is 8%. The probable average future growth has been assessed to be 1.5% per annum compound. Estimate the freehold value of the property assuming an ARY of 5%. You are asked to use the DCF approach.

a) A client wants to purchase a shop as part of an investment portfolio. The shop was let on a 20-year FRI lease, 8 years ago at the rent of €120,000 per annum and is subject to 5-yearly, upwards-only rent reviews. The investor's target (equated yield) is 8%. The probable average future growth has been assessed to be 1.5% per annum compound. Estimate the freehold value of the property assuming an ARY of 5%. You are asked to use the DCF approach.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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a) GCB has offered to grant you GHC50,000 loan with an annual interest of 24% compounded monthly to buy a house. What would be the monthly payment on the loan if the mortgage would be fully amortized in 20 years? b) Find the future and present value of a 5 year GHC1,000.00 annuity if the rate of interest is 12% and the first monthly payment is made now. c) Dividend of a share is forecasted to grow -6% next year, grow super-normally at 30% the next 3 years, and at a constant rate of 7.5% thereafter. What is the value of the stock in question if dividend paid this year is GHC4.50/share and the required return is 13%. d) Calculate the value of a 10-year, 10% $1,000.00 semi-annual coupon bond if the prevailing market interest rate is 8%.
An agreement stipulates payments of $5000,$3500 and $6000 in three, six and nine months, respectively from today. what is the highest price on an investor will offer today to purchase the agreement if he requires a minimum rate of return of 3.75%?
Assuming the leasehold yield is 2% above the freehold yield, calculate the Years Purchase (YP) dual rate for 10 years if the accumulative rate is 3% and that a comparable freehold property let at full market rent of $40,000 has just been sold for $500,000. Hint: Analyse the market yield from the comparable first and then use it to calculate the required YP. 4.3872 7.3625 6.1250 5.3410
4
Subject: Financial strategy & policy 1) A leasing contract calls for an immediate payment of $100,000 and nine subsequent $100,000 semiannual payments at six month intervals. What is the PV of these payments if the annual discount rate is 8 percent? 2) Siegefried Basset is 65 years of age and has a life expectancy of 12 more years. He wishes to invest $20,000 in an annuity that will make a level payment at the end of each year until his death. If the interest rate is 8 percent, what income can Mr. Basset to receive each year?
Real Estate investor borrowed Ksh 10million to invest in an asset at an interest rate of 10% p.a for 30 years. Calculate: I). Tha annual payment ii). The monthly payment iii). If the asset is expected to generate a return of Ksh 100000 per month. Advise the investor whether the investment in the asset is viable iv). Prepare a loan amortization schedule for the first ten years v). What other factors will you advise the investor to consider
You were offered RM2075.30, 10 years from now in return for an investment of RM800. Calculate the annual rate of interest you would earn if you took the offer
3) You are purchasing a car and have the option to pay $25,000 in cash (upfront) OR assume a lease with end of the month payments of $399 for five years. By purchasing, you will receive an estimated residual value (or scrap value) by selling the car for $2,500 at the end of the 5 years. If interest is 2.7% compounded annually, which financing option would you prefer? (16.1 DCF)
(a) What is the amount of interest at the end of 2 years on $450 principal for a simple interestrate of 10% per year?(b) Find the principle if the interest amount at the end of 2.5 years is $450 for a simple interestrate of 10% per year.(c) An investment of $50,000 is proposed at an interest rate of 8%. What is the future amountin 10 years? Consider both the simple and compound interests.(d) What is the present worth of $1000 for 6 years, if money is compounded 10% annually.(e) How many years will it take for an investment to double itself if the interest rate is 10%?
Your property has net operating income of 4,500,000. Assuming you value the property with a cap rate of 6.5%, what is the DSC ratio if the lender will lend up to 75% of value and the rate is 4.5% based on a monthly pay, 30 years, fully amortizing loan? Group of answer choices 1.43 1.35 1.51 1.27
GCB has offered to grant you GHC50,000 loan with an annual interest of 24% compounded monthly to buy a house, What would be the monthly payment on the loan if the mortgage would be fully amortized in 20 years? b) Find the future and present value of a 5 year GHC1,000.00 annuity if the rate of interest is 12% and the first monthly payment is made now. c) Dividend of a share is forecasted to grow -6% next year, grow super-normally at 30% the next 3 years, and at a constant rate of 7.5% thereafter. What is the value of the stock in question if dividend paid this year is GHC4.50share and the required return is 13%. d) Calkulate the value of a 10-year, 10% S1,00.00 semisannual coupon bond if the prevailing market interest rate is 8%.
An investment company has presented you with four investment proposals for the next six years with a fixed 9% annual interest rate: a) invest €5,000 now; b) invest €1200 at the end of each year for the next 5 years; c) invest €3000 now and in addition €500 at the end of each year for the next 5 years; d) invest €2000 at the end of the first, third and fifth years. Assuming this is the beginning of your first year, which investment offer allows you to accrue the most?

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