Provide correct answer general Accounting Ten years ago, you purchased someland for $100,000. The current price ofyour land is $250,000. At that time 10years ago, you could also invest yourmoney in the stock market. Over thepast 10 years, the stock market, on theaverage, returned 8% per year. Did youmake a right investment decision bypurchasing the land?

Step 1: Define Annual Rate Of ReturnAn annual rate of return is a relevant metric to benchmark…

Answered: Ten years ago, you purchased some land…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 8P

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You are thinking about buying a real estate property. If you buy the property, you think you will sell it for $714663 in 8 years. If your required return on investments of this risk is 10.54%, what is the most that you should be willing to pay for the property? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate.
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.
You bought an asset for $10,000 and sold it for $20,000 after 10 years. What was the annual rate of return on this investment? (Choose the closest rate)
You have been asked to estimate the market value of an income-producing property. The table below provides 5 years of projected cash flows for the property. Use the discounted cash flow approach to income valuation to calculate the market value. Assume that you sell the property at the end of year 5 and that the net proceeds from the sale are $5 million. Also assume that the discount rate is 10%. PGI EGI NOI Year 1 $4.18 million $750,000 $780,000 $811,200 $637,500 $663,000 $689,520 $318,750 $331,500 $344,760 $6.11 million $4.12 million Year 2 $4.40 million Year 3 Year 4 $843,648 $717,101 $358,550 Year 5 $877,394 $745,785 $372,892
Please see attached. Two questions
You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you value the land for in 10 years?
4. You have an opportunity to purchase a piece of vacant land for $30,000 cash. If you plan to hold it for 15 years and then sell it at a profit. During this period, you would have to pay annual property taxes of $600 and have no income from the property. Assuming that you would want a 10% rate of return from the investment, a) Draw a cashflow diagram. b) What net price would you have to sell it in the next 15 years?
An investment is now worth 46,200. You bought this investment 15 years ago for $5,000. What return did you earn in this investment?
Chapter 4, Question 2. Please see attached. Two questions.
You purchase a quarter section (160 acres) of land for $176,000 today and sell it in exactly 9 years for $525,000 at auction. At what annual compound rate did the value of your land grow?
How much would you pay to participate in a real estate project that pays nothing for the first 10 years and $1,500 for the following 10 years if you can earn 13% return on other investments of similar risk? Do steps on EXCEL.
Suppose an investor is interested in purchasing the following income producing property at a current market price of $ 1,490,000. The prospective buyer has estimated the expected cash flows over the next five years to be as follows: Year 1 = $88,000, Year 2 = $90,662, Year 3 = $91,923, Year 4 = $95,778, Year 5 = $97,000. Assuming that the required rate of return is 15% and the estimated proceeds from selling the property at the end of year five is $1,860,000, what is the NPV of the project? What is the IRR of the project?

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