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Alina [70]
3 years ago
9

A property that produces a first year NOI of $80,000 is purchased for $750,000. The NOI is expected stay constant through year 5

, and to increase by 15% in the sixth year when some of the leases turn over. The NOI would then stay constant in years 6-10. The resale price in year 10 is expected to be $830,000. What is the net present value of investing in this property based on the 10-year holding period and a required return of 9.5%
Business
1 answer:
PIT_PIT [208]3 years ago
4 0

Answer: $115998

Explanation:

Based on the information given, we can calculate the NOI from the 6th year which will be:

= $80,000 × (100% + 15%)

= $80,000 × 115%

= $80,000 × 1.15

= $92,000

Therefore, the net present value of the property based on the 10-year holding period and a discount rate of 9.5% will be:

= 80000(PVAF, 5 year) + 92000[PVAF,(10-5),9.5%] + 830000/(1.095)10-750000

= (80000 × 3.839) + (92000 × 2.439) + (830000 × 0.403) - 750000

= 307120 + 224388 + 334490 - 750000

= 865998 - 750000

= $115998

Therefore, the net present value is $115998

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Answer:

The correct answer to the following question will be "8%".

Explanation:

The given values are:

Number of years of maturity = 5 years

Interest rate of coupon = 10%

                           = 10%×1000

                           = 100

Yield to maturity, YTM = 8%

As we know,

Price of Bond = PV of Coupons + PV of Per Value

On putting the values in the above formula, we get

⇒                     = \frac{100\times (1-(1+8 \ percent^{-5}))}{8 \ percent} +\frac{1000}{1+8 \ percent^{5}}

⇒                     = 1079.85

After 1 years, we get

Price of Bond = PV of Coupons + PV of Per Value

On putting the values in the above formula, we get

⇒                     = \frac{100\times (1-(1+8 \ percent^{-4}))}{8 \ percent} +\frac{1000}{1+8 \ percent^{4}}

⇒                     = 1066.24

Now,

The total return rate = \frac{(1066.24-1079.85+100)}{1079.85}

                                   = \frac{86.39}{1079.85}

                                   = 8 \ percent

7 0
3 years ago
(TCO E & F) A _____ position in T-bond futures should be used to hedge falling interest rates and a _____ position in T-bond
MariettaO [177]

Answer: The correct answer is LONG; LONG

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A short position refers to when the seller of the financial instrument does not own it.

6 0
3 years ago
What type of résumé presents the job seeker's characteristics and experience in terms that accommodate the computer search proce
Reil [10]
The correct answer is keyword resume.
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3 0
3 years ago
Annual Income Statement Data Selected Year-End Balance Sheet Data Sales $ 50,000 Prepaid expenses increase $ 3,000 Expenses: Inv
Solnce55 [7]

Answer:

see calculation and working below

Explanation:

operating activities section

Net income                                                               $ 8,500

Adjust for changes in non- cash items :

Amortization expense                                                $1,500

Adjust for changes in working capital :

Prepaid expenses increase                                   ($ 3,000)

Inventory increase                                                     ($500)

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6 0
3 years ago
A publicist's compensation package includes the total cost of a $180-per-
natima [27]

Answer:

D. $44,580

Explanation:

Here we want to find the yearly value of the compensation package.

To order to do so, we have to add the various terms. We have:

t_1=\$42,000 salary per year

Then we have the total cost of a $180-per- month health insurance plan; since there are 12 months in a year, it is

t_2=12\cdot \$180 =\$2160 per year

Then we have the total cost of a $35-per-month life insurance, so the yearly cost is

t_3=12\cdot \$35 =\$420

Therefore, the total compensation package is

T=t_1+t_2+t_3=42000+2160+420=\$44,580

So, option D.

7 0
3 years ago
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