Question: please, i need help as soon as possible. Example - You have the opportunity to purchase an office building for $350,000. You have a tenant

please, i need help as soon as possible.  please, i need help as soon as possible. Example - You
have the opportunity to purchase an office building for $350,000. You have
a tenant lined up that will generate $16,000 per year in cash

Example - You have the opportunity to purchase an office building for $350,000. You have a tenant lined up that will generate $16,000 per year in cash flows for three years. At the end of three years you anticipate selling the building for $450,000. What is the IRR? Computer-accomplished iteration - Financial Calculators or Excel Do you accept or reject this offer if your cost of capital is 10? Example (Mutually exclusive projects; magnitude) - In addition to the opportunity to rent to the tenant (see previous slide), you also have the opportunity to restore and LEED certify that building. You would have to invest an additional $350,000, but you could obtain double the rent and increase the resale value to $900,000 after three years. What is the IRR? Which project should you invest in? Hint: what are the NPVs of the two projects if your cost of capital is 10%? You are not indifferent! Example (Borrowing/Lending Problem) - You have the opportunity to borrow $350,000 to pay for your wife's battle with cancer. You will have to repay $64,400.60 annually over 10 years. What is the IRR? Would you accept or reject this offer if your cost of capital is 10%

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