1.) How much would you pay for the right to receive $575,000 at the end of 14 years if you can earn a 11.00% return on a real estate investment with similar risk?

2.) You want to purchase a house in five years and expect that you will need a down payment of $105,000 to purchase the house. What constant amount invested at the end of each year at a 3.25% annual interest rate will be worth $105,000 at the end of five years?

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3. You have $50,000 available for investment today. In eight years youll need $65,000 for a down payment to buy a house. If you invest the $50,000 today what annual return on investment would you need to earn to meet your down payment requirement?

4. Suppose you deposit $175,000 in an account today that pays 7.25% interest, compounded annually. How long will it take before you have $455,000 in your account? FV 455,000 I 7.25% N 14 PMT 0 PV 175,000 5.) What is the PV of a real estate investment that produces a net operating income of $105,000 a year for the next 5 years and sales proceeds of $1,050,000 at the end of the 5th year? Assume your opportunity cost of capital is 8.25%.

6.) You own a building that a local business wants to rent for the next 10 years. The business owner has offered to pay $430,000 today or pay $70,000 at the end of each of next 10 years. If your required rate of return is 9.25%, which payment schedule should you accept? Which option is better (lump sum or annual payments)?

7.) How much would you pay to participate in a real estate project that pays $0 for the first two years and $1,500,000 for the following three years if you can earn a 9.00% return on other investments of similar risk?

8.) You are evaluating an investment that will provide the cash flows listed below at the end of each year. You believe that you should earn 11.50% percent compounded annually on this investment. How much would you be willing to pay for this investment? Year 1 2 3 4 5 CFs 150,000 200,000 275,000 350,000 3,750,000

9.) An investment is expected to produce the following annual year-end cash flows: Year 1, $32,500; Year 2, $35,000; Year 3, $37,500; Year 4, $40,000; and Year 5, $45,000. If the investment costs you $165,000 today what is its expected annual internal rate of return, compounded annually? Year 0 1 2 3 4 5 CFs -165,000 32,500 35,000 37,500 40,000 45,000

10.) Recalculate the IRR for the previous question assuming the cash flows are all received in the beginning of the year. Year 0 1 2 3 4 5 CFs -165,000 32,500 25,000 37,500 40,000 45,000 IRR 7% ??

11.) Calculate the IRR and NPV for the following cash flows. Assume a 13.50% discount rate. Year Project 1 CFs Project 2 CFs 0 ($260,000) ($260,000) 1 30,000 105,000 2 45,000 155,000 3 55,000 45,000 4 105,000 55,000 5 155,000 30,000

12.) You plan on making two investments over the next 7 years. The first investment requires a $87,500 down payment at the end of year 5. The second investment requires a $227,500 down payment at the end of year 7. Assuming you earn a 7.30% interest (compounded annually) on your deposits, how much would you need

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