Q1(c). Due to high demand for apartments, the rental condo will earn the following cash flows over your anticipated three-year holding period: Year 0 (350,000) $ $ - Year 1 Rental Condo Investment Purchase S Rental Income $ Sale $ S Total Cash Flows S (350,000) $ 28,000 S Calculate the Net Present Value for the Rental Condo Investment. Show your work by either showing the Excel Function you used or laying out the formula you used to solve for NPV. - Year 2 $ 28,000 $ 28,000 $ $ 28,000 $ 555 - - Year 3 - 28,000 430,000 458,000
Q1(c). Due to high demand for apartments, the rental condo will earn the following cash flows over your anticipated three-year holding period: Year 0 (350,000) $ $ - Year 1 Rental Condo Investment Purchase S Rental Income $ Sale $ S Total Cash Flows S (350,000) $ 28,000 S Calculate the Net Present Value for the Rental Condo Investment. Show your work by either showing the Excel Function you used or laying out the formula you used to solve for NPV. - Year 2 $ 28,000 $ 28,000 $ $ 28,000 $ 555 - - Year 3 - 28,000 430,000 458,000
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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Question
4
Transcribed Image Text:Question #1:
You are trying to make a choice between two
investments: a single-family home and a rental
condo. After careful research, you arrive at the cash
flows from each project shown in the Q1a and Q1c
below.
Assume you could otherwise earn a 4% return on your capital if you didn't invest in either project.
Transcribed Image Text:Q1(c). Due to high demand for apartments, the rental condo will earn the following cash flows over
your anticipated three-year holding period:
Year
0
(350,000) $
$
-
Year
1
Rental Condo Investment
Purchase
S
Rental Income
$
Sale
$
S
Total Cash Flows
S
(350,000) $
28,000 S
Calculate the Net Present Value for the Rental Condo Investment.
Show your work by either showing the Excel Function you used or laying out the formula you used
to solve for NPV.
-
Year
2
$
28,000 $ 28,000 $
$
28,000 $
555
-
-
Year
3
-
28,000
430,000
458,000
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