Assume that you purchase a property for $2,000,000 and it generates $15,000 per month of rental income and you sell it after 15 years for $2,275,000. What is your yield (annual rate of return) on this investment?
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Assume that you purchase a property for $2,000,000 and it generates $15,000 per month of rental income and you sell it after 15 years for $2,275,000. What is your yield (annual rate of
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- 1. Assume that you purchase a property for $2,000,000 and it generates $25,000 per month of rental income and you sell it after 15 years for $3,275,000. What is your yield (monthly rate of return) on this investment?Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?Suppose you invest $3,000 today and receive $10,000 in 25 years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? a. What is the internal rate of return (IRR) of this opportunity? The IRR of this opportunity is%. (Round to two decimal places.) b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? The periodic payment that gives the same IRR is $ (Round to the nearest cent.)
- 2. Assume that you purchase a property for $2,450,000 and it generates $195,000 per year of rental income and you sell it after 30 years for $2,975,000. What is your yield (annual rate of return) on this investment?You have an investment opportunity that requires an initial investment of $3,600 today and will pay $5,900 in one year. What is the rate of return of this opportunity?Consider an asset that costs $120 today. You are going to hold it for 1 year and then sell it. Suppose that there is a 25 percent chance that it will be worth $100 in a year, a 25 percent chance that it will be worth $115 in a year, and a 50 percent chance that it will be worth $140 in a year. What is its average expected rate of return? Next, fifi gure out what the investment’s average expected rate of return would be if its current price were $130 today. Does the increase in the current price increase or decrease the asset’s average expected rate of return? At what price would the asset have a zero rate of return?
- An investment pays you $1000 at the end of each of the next 3 years. The investment will then pay you $2000 at the end of Year 4, $3000 at the end of Year 5, and $5000 at the end of Year 6. If the interest rate earned on the investment is 8 percent, what is its present value? What is its future value?An investment will pay $150 at the end of each of the next 3 years, $300 at the end of Year 4, $600 at the end of Year 5, and incur a $500 cost at the end of Year 6. If other investments of equal risk earn 6.7% annually, what is this investment’s present value? Its future value?What is the returnon an investment that costs $1,000 and is soldafter 1 year for $1,060?
- You are offered an investment that requires you to put up $5,000 today in exchange for $12,000 10 years from now. What is the annual rate of return on this investment?An investment opportunity requires a payment of $620 for 12 years, starting a year from today. If required rate of return is 6.00 percent, what is the value of the investment to you today?You have bought property today for $600,000. You have estimated that it will provide monthly net cash flows of $10,000 and you think you could sell it for $800,000 in 5 years. What is the implied rate of return on this property?