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
Related questions
Question
Transcribed Image Text:Annual Loan Payment
Mortgage Balance
Year
PGI
VCL
EGI
Expenses
NOI
Debt Service
BTCF
Cash Flow from Sale in
Year
Sale Price
Sales Costs
Mortgage Balance
BTCF
$100,724
$1,302,761 year
1
$250,000
$256,250 $262,656 $269,223 $275,953 $282,852
$25,000 $25,625 $26.266 $26,922 $27,595 $28,285
$225,000 $230,625 $236,391 $242,300 $248,358 $254,567
$90,000
$92,250 $94,556 $96,920 $99,343 $101,827
$138,375 $141,834 $145,380 $149,015 $152,740
$100,724 $100,724 $100,724 $100,724 $100,724
$37,651 $41,110 $44,656 $48,290 $52,016
$135,000
$100,724
$34,276
5
$2,318,548
SO
$1,302,761
$1,015,787
5
2
3
4
5
6
What is the before tax NPV using a 15% equity discount rate? (round your final answer to
whole numbers)
Transcribed Image Text:14.
You are an employee of a consultant company and have been given the following information to
do an investment analysis of a new small income-producing property for sale to a potential
investor. What is the before tax NPV using a 15% equity discount rate? (round your final answer
to whole numbers)
Asking Price
Rent Year 1
Growth Rent
Vacancy and Coll Loss
Expenses
LTV
Loan Interest
Loan Term
Payments Per Year
Property Appreciation
Rate
Holding Period
Selling Costs
Equity Discount Rate
$2,000,000
$250,000
2.50%
Equity
Loan
10%
40%
70%
6%
30
12
3%
5
0%
15%
of rents
of EGI
$600,000
$1,400,000
years
The above information results in the following investment analysis.
years
of sale
price
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education