
Real Estate Principles 3rd Edition by David Ling,Wayne Archer
Edition 3ISBN: 978-0073377322
Real Estate Principles 3rd Edition by David Ling,Wayne Archer
Edition 3ISBN: 978-0073377322 Exercise 17
An office building is purchased with the following projected cash flows:
• NOI is expected to be $130,000 in year 1 with 5 percent annual increases.
• The purchase price of the property is $720,000.
• 100 percent equity financing is used to purchase the property.
• The property is sold at the end of year 4 for $860,000 with selling costs of 4 percent.
• The required unlevered rate of return is 14 percent.
a. Calculate the unlevered internal rate of return ( IRR ).
b. Calculate the unlevered net present value ( NPV ).
• NOI is expected to be $130,000 in year 1 with 5 percent annual increases.
• The purchase price of the property is $720,000.
• 100 percent equity financing is used to purchase the property.
• The property is sold at the end of year 4 for $860,000 with selling costs of 4 percent.
• The required unlevered rate of return is 14 percent.
a. Calculate the unlevered internal rate of return ( IRR ).
b. Calculate the unlevered net present value ( NPV ).
Explanation
a. IRR =...
Real Estate Principles 3rd Edition by David Ling,Wayne Archer
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