Suppose you want to buy a rental property priced at 500,000. Rent is paid quarterly. 1 st
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Suppose you want to buy a rental property priced at 500,000. Rent is paid quarterly. 1st year: 4,000 per quarter; 2nd year: 5,000 per quarter; At the end of the 2nd year, the property will be sold for $550,000.
Calculate the net present value (NPV) of the investment. Assume discount rate is j2=5%. Hint: get the effective rate given quarterly payment and j2=5%, and then use it to get NPV.
Calculate the internal rate of return of the investment.
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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