An apartment building in your neighborhood is for sale for $140,000. The building has four units, which

Question:

An apartment building in your neighborhood is for sale for $140,000. The building has four units, which are rented at $500 per month each. The tenants have long-term leases that expire in 5 years. Maintenance and other expenses for care and upkeep are $8000 annually. A new university is being built in the vicinity and it is expected that the building could be sold for $160,000 after 5 years.
(a) What is the for this investment?
(b) Should this investment be accepted if the other options have a rate of return of 12%?
Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...