Please answer all in Excell and need all the calculations:

An investor has projected three possible scenarios for a project as follows:

PessimisticNOI will be $200,000 the first year, and then decrease 2 percent per year over a five-year holding period. The property will sell for $1.8 million after five years.

Most likelyNOI will be level at $200,000 per year for the next five years (level NOI) and the property will sell for $2 million.

OptimisticNOI will be $200,000 the first year and increase 3 percent per year over a five-year holding period. The property will then sell for $2.2 million.

The asking price for the property is $2 million. The investor thinks there is about a 30 percent probability for the pessimistic scenario, a 40 percent probability for the most likely scenario, and a 30 percent probability for the optimistic scenario.

a. Compute the IRR for each scenario.

b. Compute the expected IRR.

c. Compute the variance and standard deviation of the IRRs.

d. Would this project be better than one with a 12 percent expected return and a standard deviation of 4 percent?

a:

	A	B	C	D	E	F	G
1	Particulars	0	1	2	3	4	5
2	NOI		200000	=C2-(C2*2%)	=D2-(D2*2%)	=E2-(E2*2%)	=F2-(F2*2%)
3	Resale property						1800000
4	Ask price	-2000000
5	Cash flows	=SUM(B2:B4)	=SUM(C2:C4)	=SUM(D2:D4)	=SUM(E2:E4)	=SUM(F2:F4)	=SUM(G2:G4)
6	IRR	=IRR(B5:G5)

Thus, the internal rate of return pessimistic is 7.93%.

b:)

Excel workings:

	A	B	C	D	E	F	G
1	Particulars	0	1	2	3	4	5
2	NOI		200000	200000	200000	200000	200000
3	Resale property						2000000
4	Ask price	-2000000
5	Cash flows	=SUM(B2:B4)	=SUM(C2:C4)	=SUM(D2:D4)	=SUM(E2:E4)	=SUM(F2:F4)	=SUM(G2:G4)
6	IRR	=IRR(B5:G5)

Thus, the internal rate of return of most likely is 10%.

NEED C & D?