Question
A real estate investment of $5,000,000 is expected to generate an NOI of $600,000 per year and will be resold at a cap rate of
A real estate investment of $5,000,000 is expected to generate an NOI of $600,000 per year and will be resold at a cap rate of 8 % in 3 years. If the available financing is $3,000,000 at 6% with no amortization, calculate the unlevered NPV using WACC (see below) and the levered IRR.
- Market value of equity $70,000,000
- Cost of equity 25%
- Market value of debt $150,000,000
- Cost of debt 12%
- Tax rate 30%
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Fundamentals of Investment Management
Authors: Geoffrey Hirt, Stanley Block
10th edition
0078034620, 978-0078034626
