Question: Complete a Comprehensive Case Study Assignment Instructions You are looking at the following projects and need to decide how best to deploy an inheritance you
Complete a Comprehensive Case Study Assignment Instructions
You are looking at the following projects and need to decide how best to deploy an inheritance you received of $150,000. Using the information below, determine the following ratios. You may use an excel spreadsheet to complete a comprehensive review of each of the properties below. Once you have completed the ratios, you are to determine which property would be the best option. Support your answer in a report using appropriate ratios and any other relevant factors you deem necessary.
- Gross Income Multiplier
- Net Income Multiplier
- Operating Ratio
- Break Even
- Debt Coverage Ratio
- Overall Cap Rate
- Equity Dividend Rate
- Cash on Cash Return
- Present Value of Cash Flows
- Net Present Value
- Profitability Index
- Investment Value
- Internal Rate of Return
Which option would you select given the following factors:
Annual Growth Rate: 4%
Required Rate of Return: 8%
Tax Rate: 15%
Equity Available: $150,000
Loan Rate: 4%
Holding Period: 12 Years
Annual Price Appreciation: 3.5% per year
*For this example, we will not consider the vacancy rate for now.
| Units | Sales Price | Avg Revenue Per Unit/Month | Annual Operating Expenses (Interest not included) | |
| Duplex | 2 | $ 125,000.00 | $ 615.00 | $ 6,642.00 |
| Duplex #2 | 2 | $ 105,000.00 | $ 575.00 | $ 6,210.00 |
| Fourplex | 4 | $ 245,000.00 | $ 850.00 | $ 22,160.00 |
| Apartment Building #1 | 16 | $ 600,000.00 | $ 600.00 | $ 69,840.00 |
| Apartment Building #2 | 32 | $ 1,200,000.00 | $ 695.00 | $ 162,096.00 |
| Single Family Home #1 | 1 | $ 189,000.00 | $ 1,750.00 | $ 11,010.00 |
| Single Family Home #2 | 1 | $ 215,000.00 | $ 2,000.00 | $ 13,400.00 |
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