buys a property that costs $1,000,000. The property is p ate NOI as follows:

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
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QUESTION 9
Bob buys a property that costs $1,000,000. The property is projected to
generate NOI as follows:
Year
NOI
$100,000
1
2
$105,000
3
$110,000
Bob will own the property for two years.
Bob will sell the property at the end of year 2 at a cap rate that is 250 basis
points lower than the cap rate at which he bought the property.
What is Bob's annualized IRR for the investment in question
A. 26.21%
B. 30.47%
C. 27.78%
D. 14.89%
Transcribed Image Text:QUESTION 9 Bob buys a property that costs $1,000,000. The property is projected to generate NOI as follows: Year NOI $100,000 1 2 $105,000 3 $110,000 Bob will own the property for two years. Bob will sell the property at the end of year 2 at a cap rate that is 250 basis points lower than the cap rate at which he bought the property. What is Bob's annualized IRR for the investment in question A. 26.21% B. 30.47% C. 27.78% D. 14.89%
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