An investor is considering to purchase an apartment for sh. 1 million to be financed by 30% equity and 70% mortgage. This price includes a building value of Sh.900,000, which will be depreciated on a straight-line basis over 27.5 years. The projected Net operating income is Sh. 100,000 during the first year and is expected to increase at 3% per annum over a five-year holding period. The property value is also projected to increase at 3 % per year over a five-year holding period.The investor is in the 28 percent tax bracket for ordinary income and capital gains. The lender has offered a conventional, fixed rate, constant payment loan for sh. 700,000 at a 10 percent interest rate (with monthly payments) over a 15-year term. Required:Calculate the net present value of free cash flows to equity
An investor is considering to purchase an apartment for sh. 1 million to be financed by 30% equity and 70% mortgage. This price includes a building value of Sh.900,000, which will be
The investor is in the 28 percent tax bracket for ordinary income and
Required:
Calculate the
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