An investor buys a land for Php 1 Million and constructs a three-door apartment for students worth Php 5 Million. He estimates that the annual receipts from the apartment to be Php 1.2 Million and annual expenses to cover taxes, insurance and maintenance of the apartment to be Php 100,000. He also estimates that the land can be sold for Php 3 Million at the end of 10 years. If his money is now earning 8% interest before taxes, will thid property earn enough for the investment to be justified? Use the IRR method. Show the cash flow diagram and complete solution. Do not use excel pls. Thank you.
An investor buys a land for Php 1 Million and constructs a three-door apartment for students worth Php 5 Million. He estimates that the annual receipts from the apartment to be Php 1.2 Million and annual expenses to cover taxes, insurance and maintenance of the apartment to be Php 100,000. He also estimates that the land can be sold for Php 3 Million at the end of 10 years. If his money is now earning 8% interest before taxes, will thid property earn enough for the investment to be justified? Use the IRR method. Show the cash flow diagram and complete solution. Do not use excel pls. Thank you.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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An investor buys a land for Php 1 Million and constructs a three-door apartment for students worth Php 5 Million. He estimates that the annual receipts from the apartment to be Php 1.2 Million and annual expenses to cover taxes, insurance and maintenance of the apartment to be Php 100,000. He also estimates that the land can be sold for Php 3 Million at the end of 10 years. If his money is now earning 8% interest before taxes, will thid property earn enough for the investment to be justified? Use the IRR method.
Show the cash flow diagram and complete solution. Do not use excel pls. Thank you.
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