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natta225 [31]
3 years ago
6

A client has requested advice on a potential investment opportunity involving an income-producing property. She would like you t

o determine the internal rate of return of the investment opportunity based on the following information: expected holding period: years; end of first year NOI estimate: $113,900; NOI estimates in subsequent years will grow by 5% per year; price at which the property is expected to be sold at the end of year 5: $1,615,205.22; current market price of the property: $1,475,667.71.
A. -15.30%
B. 8.60%
C. 9.86%
D. 10.00%
Business
1 answer:
s2008m [1.1K]3 years ago
5 0

Answer:

The correct answer is D. 10.00%

Explanation:

To get internal rate of return we use excel or a spreadsheet.  See document attached.

Make the cash flow to solve this problem.  At moment 0 we have the investment cost , in this case $1.475.668 (negative) From period 1 to period 5, we have different incomes o benefits.  Salvage value is 1.615.205, we are going to get it at moment 5 (positive).

Then, we calculate the Net cash flow that is the difference between benefits and cost.

We use all the result (positive and negative) in Net cash flow to get the IRR.

Net Present Value (NPV) 768907

Internal Rate of Return (IRR) 10,00%

Download xlsx
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A municipal bond has yield to maturity of 4.83 percent. An investor with a marginal tax rate of 35 percent is indifferent betwee
mezya [45]

Answer: 7.43%

Explanation:

The yield to maturity simply refers to the total return that is expected on a bond as long as the bond is held till it matures.

In this case, since the investor is indifferent between this municipal bond and an otherwise identical taxable corporate bond, the yield to maturity of the corporate bond will be:

4.83% = Corporate bond YTM × ( 1- 35%)

4.83% = Corporate bond YTM × 65%

Corporate bond YTM = 4.83% / 65%

Corporate bond YTM = 0.0483/0.65

Corporate bond YTM = 7.43%

The yield to maturity of the corporate bond is 7.43%

3 0
3 years ago
Omega Custom Cabinets produces and sells custom bathroom vanities. The firm has determined that if it hires 10 workers, it can p
adell [148]

Answer:the correct answer is A. For the 11th worker, the marginal profit is $600.

Explanation:

10 men             20  vanities per week

11   men            22 vanities per week

1 man more       2 vanities more

If the company uses 1 man more produces 2 vanities more, so the company spends $1000 on the extra man and makes 2*$800= $1,600 (for two extra vanities). For the 11th worker, the marginal profit is = $1600-$1000= $600

6 0
3 years ago
a rectangular swimming pool has dimensions 45 metre by 20 metre concrete path of 3.5 m width is laid around it .Find the cost of
Anon25 [30]

Answer:

Rs. 5993.75

Explanation:

The computation of the cost of laying the path is given below:

= {area of(pool +path)- area of pool }

= ((45 + 3.5) × (20 + 3.5)) - (45 × 20)

= (48.5×23.5) - (45 × 20)

= 1139.75 - 900

= 239.75 square meters

Now the cost is

= 239.75 × 25

= Rs. 5993.75

8 0
3 years ago
Marx Company has a current production capacity level of 200,000 units per month. At this level of production, variable costs are
Misha Larkins [42]

Answer:

Effect on income= 7,500 increase

Explanation:

Giving the following information:

Variable costs are $0.50 per unit.

Current monthly sales are 183,000 units.

Heaven Company has contacted Marx Company about purchasing 15,000 units at $1.00 each.

Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.

Sales= 15,000*1= 15,000

Variable cost= 15,000*0.5= (7,500)

Effect on income= 7,500 increase

5 0
3 years ago
Read 2 more answers
Click this link to view O*NET’s Wages and Employment section for Construction Managers. According to O*NET, what is the projecte
Aleks04 [339]
Do you know the answer cause I. Need help aswellllllllllll
4 0
3 years ago
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