ANSWERS ARE GIVEN PLEASE GIVE EXCEL FORMULAS Suppose you are a mortgage lender You have determined that the maximum monthly mortgage payment the borrow can afford is $1200 for 30 years Given you want to earn a 6 5 percent rate of return per year compounded monthly, what is the most you are willing to lend the borrower PV $189,853 98 You are thinking about letting a friend borrow $1,000 today given that she will repay you $2,000 in 3 5 years What is your internal rate of return on the investment I Y 21 90 You paid $400,000 for a small retail space that has the following net cash inflows YR 1 $30,000 YR 2 $45,000 YR 3 $ 70,000 Your net sale price was $450,000 What was your rate of return on this investment IRR 15 21 You are an appraiser expect the annual net operating incomes from a commercial investment property to be the following YR 1 ($500,000) YR 2 $700,000 YR 3 $ 1,000,000 YR 4 through YR 10 $1,250,000 Many properties, including this one (as you can see above) operate at a loss in the first year Including a net sale price of $10,000,000 at the end of the 10 th year, what is the CURRENT market value of this property today assuming a discount rate of 6 annually NPV $12,433,710 32

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ANSWERS ARE GIVEN!!!! PLEASE GIVE EXCEL FORMULAS Suppose you are a mortgage lender. You have determined that the maximum monthly mortgage payment the borrow can

ANSWERS ARE GIVEN!!!! PLEASE GIVE EXCEL FORMULAS

Suppose you are a mortgage lender. You have determined that the maximum monthly mortgage payment the borrow can afford is $1200 for 30 years. Given you want to earn a 6.5 percent rate of return per year compounded monthly, what is the most you are willing to lend the borrower?

PV = $189,853.98

You are thinking about letting a friend borrow $1,000 today given that she will repay you $2,000 in 3.5 years. What is your internal rate of return on the investment?

I/Y = 21.90%

You paid $400,000 for a small retail space that has the following net cash inflows:

YR 1 - $30,000

YR 2 - $45,000

YR 3 - $ 70,000

Your net sale price was $450,000. What was your rate of return on this investment?

IRR = 15.21%

You are an appraiser expect the annual net operating incomes from a commercial investment property to be the following:

YR 1 ($500,000)

YR 2 - $700,000

YR 3 - $ 1,000,000

YR 4 through YR 10 - $1,250,000

Many properties, including this one (as you can see above) operate at a loss in the first year. Including a net sale price of $10,000,000 at the end of the 10^th year, what is the CURRENT market value of this property today assuming a discount rate of 6% annually.

NPV = $12,433,710.32