Question
2) Suppose you have developed the following information for a potential investment: current market value is $1,200,000; anticipated loan to value ratio is .80 with
2) Suppose you have developed the following information for a potential investment:
current market value is $1,200,000; anticipated loan to value ratio is .80 with 2
points; and predicated cash flows of ATCF1 = $38,560, ATCF2 = $41,780, ATCF3 =
$37,210, ATCF4 = $39,127, and ATER4 = $191,730. Further, assume the investor's
minimum required after-tax rate of return on equity is 12%.
a. What is the internal rate of return on this potential investment?
b. What is the profitability index on this investment?
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Practical Financial Management
Authors: William R. Lasher
8th edition
1305637542, 978-1305887237, 1305887239, 978-1305637542
