Answer the Questions Below using the Following Information.

We have the Option to Invest in a Rental Property with a Plan to Sell the Property at the End of 15 Years.

1. The Cost to Purchase the Rental Property is $300,000, and requires a Cash Down Payment of 30% Due Now Today (NO Tax)
2. The 70% Principal Balance will be paid to the Bank when we SELL the property at END (NO Tax)
3. The Interest Only Mortgage Payments are $10,000 Per Year (TAX)
4. County Property Tax Payments are $5,000 Per Year (TAX)
5. Extensive Repairs are predicted in Year 8 at a Cost of $20,000 (TAX)
6. Rental Income is $24,000 Per Year (TAX)
7. It is estimated that the Rental Property can be sold in 15 Years for $330,000 (NO Tax)
8. Depreciation Expense is a Deduction for Taxes at $12,000 per Year (300k/25 Yr Life =12k) (TAX)
9. Assume Our Cost of Capital or Our Required Rate of Return is 10%
10. Assume Our Tax Rate is 30%. Add or Subtract the Tax Cost or Benefit When Needed (TAX)
11. Round All Answers to the NEAREST Dollar.

QUESTIONS

• Input your Answers as a Number Only to the Nearest Dollar, No Commas, Decimals, or Dollar Signs. Show a Negative Number in Parens, Example = -150 = (150), Except Where it is Noted Otherwise.

Compute the PV,Present Value of the Down Payment =

Compute the PV of the Principal Due to be Paid at the End =

Compute the PV of the Mortgage Interest Cost =

Compute the PV of the Property Taxes Cost =

Compute the PV of the Repairs Cost =

Compute the PV of the Rental Income =

Compute the PV of the Sale of Rental Property =

Compute the PV, +/(-) of the Depreciation Benefit =

Compute the NPV, Net Present Value, of the Rental Investment Opportunity =

Which Rate is Greater on this Investment IRR or COC? = . Input your Answer as either IRR or COC, all Caps.

How Do you know the Answer to the Question Above? =Input your Answer with one of the Following; IRR>0 or IRR<0 or coc>0 or COC<0 or npv>0 or NPV<0

Is the IRR for this Investment Greater than 10% ? = Input your Answer with either YES or NO.

How Do you know the Answer to the Question Above? =Input your Answer with One of the Following; IRR>0 or IRR<0 or coc>0 or COC<0 or npv>0 or NPV<0 or irr>COC or COC>IRR

Compute the Net Cash Flow for this Capital Project = Ignore Time Value of Money? Input your Answer as a Number Only to the Nearest Dollar, No Commas, Decimals, or Dollar Signs. Show a Negative Number in Parens, Example = -150 = (150).

Is this a Good Investment ? = Input your answer with either YES or NO.

How Do you know the Answer to the Question Above? =Input your Answer with One of the Following; IRR>0 or IRR<0 or coc>0 or COC<0 or npv>0 or NPV<0 or irr>COC or COC>IRR