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 10 Years.

1. The Cost to Purchase the Rental Property is $200,000, and requires a Cash Down Payment of 60% Due Now Today (NO Tax)
2. The 40% Principal Balance will be paid to the Bank when we SELL the property at END (NO Tax)
3. The Interest Only Mortgage Payments are $6,000 Per Year (TAX)
4. County Property Tax Payments are $4,000 Per Year (TAX)
5. Extensive Repairs are predicted in Year 5 at a Cost of $5,000 (TAX)
6. Rental Income is $15,000 Per Year (TAX)
7. We Estimate the Rental Property can be sold in 10 Years for $275,000 (NO Tax)
8. Depreciation Expense is a Deduction for Taxes at $8,000 per Year (200k/25 Yr Life =10k) (TAX)
9. Our Cost of Capital Required Rate of Return is 9.00%
10. 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.

1. Compute the PV,Present Value of the Down Payment =
2. Compute the PV of the Principal Due to be Paid at the End =
3. Compute the PV of the Mortgage Interest Cost =
4. Compute the PV of the Property Taxes Cost =
5. Compute the PV of the Repairs Cost =
6. Compute the PV of the Rental Income =
7. Compute the PV of the Sale of Rental Property =
8. Compute the PV, +/(-) of the Depreciation Benefit =
9. Compute the NPV, Net Present Value, of the Rental Investment Opportunity =
10. Which Rate is Greater on this Investment IRR or COC or the SAME? = . Input your Answer as either IRR or COC or SAME, all CAPS.
11. 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
12. Is the IRR for this Investment Greater than 9.00% ? = . Input your Answer with either YES or NO, in CAPS
13. 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
14. Compute the Net Cash Flow for this Capital Project = . Ignore the 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).
15. Is this a Good Investment ? = . Input your answer with either YES or NO.
16. 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