I want to buy a rental property for $300,000. I believe the NOI(net operating income) will be 30,000 a year. I plan to leverage 2/3rd and use equity of 1/3rd. The interest rate the bank is charge is 8%. The Tax rate is 25%. I plan to hold for 10 years and hope to sell in year 10 at $300,000. I need base case NPV and IRR and need to know what if NOI is 10% higher and 10% lower. And, what if the economy changes and NOI is 10% higher plus interest rates are 4% OR NOI is 10% lower plus interest rates are 10%. Assume Equity cost is zero. Full depreciation in 1sr year.

Answer rating: 100% (QA)

To calculate the base case NPV and IRR as well as the scenarios with 10 higher and lower NOI and cha... View the full answer