Ten years ago Alexander bought an investment property for $100,000.00. Over the 10-year period inflation has held consistently at 2% annually. If Alexander expects a 15%/yr real rate of return, what would he sell the property for today?
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- John is considering the purchase of a lot. He can buy the lot today and expects the price to rise to $15,000 at the end of 10 years. He believes that he should earn an investment yield of 8 percent compounded annually on his investment. The asking price for the lot is $7,000. Should he buy it? What is the internal rate of return compounded annually on the investment if Johnpurchases the property for $7,000 and is able to sell it 10 years later for $15,000?Ben Collins plans to buy a house for $281,000 If that real estate property is expected to increase in value by 8 percent each year, what will its approximate value be seven years from now?Yang is considering buying an asset that, starting 5 years from now, will pay $10,000 per year forever. Assume that the required return is 7.25%. What is the most Yang should pay for this asset?
- An investor anticipates that land values for a site will be worth $150,000 in five years. Assume real estate taxes are expected to be $2,000 each year (paid at the end of each year) for the next five years and the investor can rent the parcel for $2,400 per year to a billboard company (also paid at the end of each year). How much can the investor pay today for the site and still earn a 15 percent annual return on his investment?You are buying an investment property for $362,854 today. Through research, you have determined that the value of the property is likely to grow at a rate of 7.8% per year, on average. How long until the value of the property grows to $528,707?Zachary has purchased an investment that he expects to produce income of $3,000 at the end of the first year and $4,000 at the end of the second year. If he requires an 8% rate of return compounded annually, what is the maximum amount that he can pay and still earn the required rate of return?
- Stephen claims that he invested $6,000 six years ago and that this investment is worth $28,700 today. For this to be true, what annual rate of return did he have to earn? Assume the interest compounded annually. Can the excel and calculator solutions be provided?You purchased a house for 850,000 cash 4 years ago. You can sell it today for 980,000. What rate of return did you earn on this investement? Round your answer to the nearest tenth of a percent.If you receive an inheritance of $10,000 today, how long do you have to invest it at 8% per year to be able to withdraw $2000 every year forever? Assume the 8% per year is a return that you can depend on forever.
- Mr. Dilam Gawain believes his barber shop is worth P200,000 and estimates that its value will grow at 10% per year compounded annually for the next 3 years. If he sells the business, the funds will be invested at 8% compounded quarterly for 3 years. Find (a) the future value of the business if it is to be continued and (b) what price should he sell his business at present if he chose to sell his business and still yield the same value in continuing his business?You are interested in buying a piece of real estate property that could be worth $490,000 in four years from now. If your earning interest rate is 7% compounded annually, how much would you be willing to pay for this property now?Two years ago, XYZ invested $13,800. In 3 years from today, he expects to have $26,200. If XYZ expects to earn the same annual return after 3 years from today as the annual rate implied from the past and expected values given in the problem, then in how many years from today does he expect to have exactly $33,000? O A number less than 2.00 or a number equal to or greater than 6.50 O A number equal to or greater than 2.00 but less than 3.50 O A number equal to or greater than 3.50 but less than 4.50 O A number equal to or greater than 4.50 but less than 5.50 O A number equal to or greater than 5.50 but less than 6.50