Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 12%.The following table summarizes the initial cost and the sale price in three years for each property:Cost TodaySale Price in Year 3$520,000$1,020,000Parkside Acres870,0001,470,000Real Property EstatesLost Lake Properties910,000510,000220,000Overlook20,000Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose?...The profitability index for Parkside Acres is(Round to two decimal places.)

Profitability Index: It is a measure of the attractiveness of a project or investment. A…

Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from löday. The aHU The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Year 3 Cost Today $1,020,000 Parkside Acres $520,000 1,470,000 870,000 Real Property Estates Lost Lake Properties 510,000 910,000 20,000 220,000 Overlook Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose? The profitability index for Parkside Acres is - (Round to two decimal places.)

Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from löday. The aHU The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Year 3 Cost Today $1,020,000 Parkside Acres $520,000 1,470,000 870,000 Real Property Estates Lost Lake Properties 510,000 910,000 20,000 220,000 Overlook Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose? The profitability index for Parkside Acres is - (Round to two decimal places.)

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 Property is expected to have 5 Year NOI flow of $10,000, $12,000, $15,000, $18,000, and $10,000 and a final (year 5) sale price of $90,000. Using capitalization rate of 12% what is the estimated market value of the property? 97,354 104,664 87,641 100,919 90,724
Caddis Company acquired a building with a loan that requires payments of $19,000 every six months for 3 years. The annual interest rate on the loan is 8%. What is the present value of the building? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice O O O O $99,600 $114,000 $38,988 $65,402 $48,965
2 MotoSport is buying an asset that costs $730,000 and can be depreciated at 20 percent per year (Class 8) over its eight-year life. The asset is to be used in a three-year project at the end of the project, the asset can be sold for $740,200. The company faces a tax rate of 26% The sale of this asset will close the asset class. The from the sale of asset is eBook Multiple Choice Capital gain, $10,200 Capital gain, $319,720 Terminal loss, $10,200 Terminal loss, $319,720 Capital gain: $11,583
A wedding maching custs $250,000. A facility purchases one and plans to use it for 10 years, at 'which point it will have a value of 35,000. calculate the depreciation allowance and book value after 5 yrak of use using Straight line depreciation balance depreciation (a) (b) using deckning () Uring MACKS 7-year property with 50% bonus depreciation (d) using MACKS 7- year property with 50% bonus depreciation of the machine is sold if in year s?
onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.
After 10 years 2 properties flat 1 and flat 2 are sold. Their value has increased at an annual rate of 2.67% p.a. and capital gains taxes (CGT) are paid at a rate of 19% on the capital gains. The initial properties flat 1 and flat 2 were purchased by the investor for 450000 and 150000. a) what formulas would i use to calculate the final price of the properties after 10 years with the increase annual rate taken into consideration and what value do you get b) compute the NPV of the sale of each of the 2 flats , after capital gains taxes could you please explain what formuals i would use here and what method i should follow, not necessarily a value for b as not all the data in my spreadsheet i can attach
U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows Capital investment Annual net income: (a) Year 1 2 3 4 5 Total ow Transcribed Text Project Bono $160,000 Project Bono 14,000 Project Edge 14,000 Project Clayton 14.000 ow Transcribed Text 14,000 Your answer is incorrect. 14,000 $70,000 Project Edge Project Clayton $175,000 $200,000 18,000 17,000 16,000 12,000 9,000 Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15% (Assume that cash $72,000 O Depreciation is computed by the straight-line method with no salvage value. The company's cost of capital is 15%. (Assume that cash flows occur evenly throughout the year.) Click here to view PV table. years Compute the cash payback period for each project. (Round answers to 2 decimal places, eg years C years 27,000 23,000 9 21.000 13,000 C 12,000 $96,000 1.50.) (b) The parts…
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The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $64,000 $24,000 Useful life 4 years 7 years Estimated residual value 0 0 Estimated total income over the useful life $7,680 $9,240 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer % Truck %
Harris Corporation has provided the following data concerning an investment project that it is considering: Initial investment Annual cash flow Salvage value at the end of the project Expected life of the project Discount rate $ 160,000 $ 54,000 $ 11,000 O $67,000 O $160,516 O $516 O $(5,776) 4 15 per year years % Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:
Cost estimates for a porposed public facility are being evaluated. Initial construction cost is anticipated to be $120,000 and annual maintenance expenses are expected to be $6500 for the first 20 years and $2000 for every year thereafter. The facility is to be used and maintained for an indefinite period of time. Using an interest rate of 10% per year, the capitalized cost of this facility is most nearly? a. $180,000 b. $190,000 c. $200,000 d. $270,000
A real estate development company is considering the purchase of a new piece parcel of land in manhattan that will cost $34,000,000. The land will generate $6,500,000 of rent each year for the next 20 years. what is the IRR for this new investment? NOTE: enter amount to two decimal (e.g., 78.76 or 40.00) IRR= ______ %

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