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An investor is considering the acquisition of a distressed property which is on Northlake Bank's REO list. The property is available for $203,200 and the

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An investor is considering the acquisition of a "distressed property" which is on Northlake Bank's REO list. The property is available for $203,200 and the investor estimates that he can borrow $160,000 at 4.5 percent interest and that the property will require the following total expenditures during the next year: Required: a. The investor has arranged with the lender to pay the title search and inspection during the holding period, not at acquisition (that is, the only acquisition phase expense is the purchase price). The investor is wondering what the property must sell for after one year in order to earn a 20 percent return (IRR) on equity. b. The lender is now concerned that if the property does not sell, the investor may have to carry the property for one additional year. The investor believes that he could rent it (starting in year 2) and realize a net cash flow before debt service of $2,160 per month. However, he would have to make an additional $8,160 in interest payments on his loan during that time, and then sell. What would the price have to be at the end of year 2 in order to earn a 20 percent IRR on equity? Complete this question by entering your answers in the tabs below. The investor is wondering what such a property must sell for after one year in order to earn a 20 percent return (IRR) on equity: Note: Do not round intermediate calculations. Round your final answer to nearest whole dollar amount. Complete this question by entering your answers in the tabs below. The lender is now concerned that if the property does not sell, investor may have to carry the property for one additional ye He believes that he could rent it (starting in year 2) and realize a net cash flow before debt service of $2,160 per month. However, he would have to make an additional $8,160 in interest payments on his loan during that time, and then sell. Wha would the price have to be at the end of year 2 in order to earn a 20 percent IRR on equity? Note: Do not round intermediate calculations. Round your final answer to nearest whole dollar amount

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