An appraiser determines that a comparable property would have a holding period of 5 years, terminal...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
An appraiser determines that a comparable property would have a holding period of 5 years, terminal cap rate (based on Yr 6 NOI) of 12.5% and estimates 3% selling expenses. The property's purchase price was $-385,000.00. The appraiser projects the following cash flows for NOI: Year 1: $38,000.00; Year 2: $39,000.00; Year 3: $46,000.00; Year 4: $51,000.00; Year 5: $36,000.00; Year 6: $31,000.00. What is the IRR (internal rate of return) for this comparable. An appraiser determines that a comparable property would have a holding period of 5 years, terminal cap rate (based on Yr 6 NOI) of 12.5% and estimates 3% selling expenses. The property's purchase price was $-385,000.00. The appraiser projects the following cash flows for NOI: Year 1: $38,000.00; Year 2: $39,000.00; Year 3: $46,000.00; Year 4: $51,000.00; Year 5: $36,000.00; Year 6: $31,000.00. What is the IRR (internal rate of return) for this comparable. An appraiser determines that a comparable property would have a holding period of 5 years, terminal cap rate (based on Yr 6 NOI) of 12.5% and estimates 3% selling expenses. The property's purchase price was $-385,000.00. The appraiser projects the following cash flows for NOI: Year 1: $38,000.00; Year 2: $39,000.00; Year 3: $46,000.00; Year 4: $51,000.00; Year 5: $36,000.00; Year 6: $31,000.00. What is the IRR (internal rate of return) for this comparable.
Expert Answer:
Answer rating: 100% (QA)
The IRR for this comparable is 135 To calculate the IRR we can use the following formula IRR NPVIRR ... View the full answer
Related Book For
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
Posted Date:
Students also viewed these finance questions
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
A multi-family property is for sale with an asking price of $2.75 million. You have been asked to conduct an analysis on a potential purchase of this property, based upon various assumptions, and...
-
The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $736. b. Actual sales for...
-
After several years of operations, the partnership of Leonard, Mitchell, and Swanson is to be liquidated. After making closing entries on June 30, 20--, the following accounts remain open: The...
-
A neutron collides elastically head-on with a stationary deuteron in a reactor moderated by heavy water. How much of its kinetic energy is transferred to the deuteron?
-
When an independent auditor decides that the work performed by internal auditors may have a bearing on the nature, timing, and extent of planned audit procedures, the independent auditor should...
-
The following account appears in the ledger prior to recognizing the jobs completed in June: Work in Process Balance, June 1 .......... $ 40,000 Direct materials .......... 270,000 Direct labor...
-
In the figure a "semi-infinite" nonconducting rod (that is, infinite in one direction only) has uniform linear charge density = 5.19 C/m. Find (including sign) (a) the component of electric field...
-
In November 2015, John Wells, a customer service representative of Bayfield Mud Company, was summoned to the Houston warehouse of Wet-Land Drilling, Inc., to inspect three boxcars of mud treating...
-
How does Edwin Arlington Robinson display aspects of literary modernism in his poetry?
-
What are the steps in international strategy formulation? Are these likely to vary among firms?
-
What are some of the fundamental issues that must be addressed in international advertising?
-
What are the four basic philosophies that guide strategic management in most MNCs?
-
Discuss the history of the EU. What are the major challenges the EU has had to overcome to reach its current preeminence?
-
What are the problems that a firm using market pricing might encounter?
-
Blank Slate Inc produces two types of tablet computers: a basic version and a high- end version. During January the following data are available: Basic 10,000 Actual units sold Budgeted sales Actual...
-
The following items were displayed in the statement of affairs for Lubbock Company: Fully secured liabilities ......... $90,000 Partially secured liabilities ....... 12,000 Unsecured liabilities...
-
Burke Company earned $12,000 of service revenue on account during 2013. The company collected $9,800 cash from accounts receivable during 2013. Required Based on this information alone, determine the...
-
Katz Manufacturing Company started operations by acquiring $100,000 cash from the issue of common stock. On January 1, 2013, the company purchased equipment that cost $100,000 cash, had an expected...
-
Assume that Clinton Company acquires $1,200 cash from creditors and $1,700 cash from investors. Required a. Explain the primary differences between investors and creditors. b. If Clinton has net...
-
This exercise considers the data described in the Section 13.2.2 ratemaking classification example using data in Table 13.3 Table 13.3 . a. Fit a gamma regression model using a log-link function with...
-
This exercise considers data from the Medical Expenditure Panel Survey (MEPS) described in Exercise 1.1 and Section 11.4. Our dependent variable consists of the number of outpatient (COUNTOP) visits....
-
Verify that the Tweedie distribution is a member of the linear exponential family of distributions by checking equation (13.9). In particular, provide an expression for \(S(y, \phi)\) (note that...
Study smarter with the SolutionInn App