An investor is considering an investment property, but will only pay the price that will result in their desired IRR, given expected cash flows. The property is expected to generate the following cash flows from operations: year 1: $12,000; year 2: $12,600; year 3: $13,230; and year 4: $13,890. Assume that at the end of year 4, the property could be sold to net $190,000. What price must an investor offer to receive an expected IRR of 10%? O $139,518 $153,396 O $159,752 O $145,254 O $170,522
An investor is considering an investment property, but will only pay the price that will result in their desired IRR, given expected cash flows. The property is expected to generate the following cash flows from operations: year 1: $12,000; year 2: $12,600; year 3: $13,230; and year 4: $13,890. Assume that at the end of year 4, the property could be sold to net $190,000. What price must an investor offer to receive an expected IRR of 10%? O $139,518 $153,396 O $159,752 O $145,254 O $170,522
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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Transcribed Image Text:An investor is considering an investment property, but will only pay the price that will result in their
desired IRR, given expected cash flows. The property is expected to generate the following cash
flows from operations: year 1: $12,000; year 2: $12,600; year 3: $13,230; and year 4: $13,890.
Assume that at the end of year 4, the property could be sold to net $190,000. What price must an
investor offer to receive an expected IRR of 10%?
O $139,518
$153,396
O $159,752
O $145,254
O $170,522
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