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can someone help me? Ella, Inc. is considering a new real estate project (the Investment). The Investment will cost $100,000 that must be invested today,
can someone help me?
Ella, Inc. is considering a new real estate project (the "Investment). The Investment will cost $100,000 that must be invested today, and $105,000 that must be invested at the end of year one. The Investment will have the following net after- tax cash inflows at the end of each of the next three years. Year 1: $75,000; Year 2: $75,000; and Year 3: $100,000. Ella's required rate of return is 5% per year. For those who have not yet mastered their calculators, the factor for the present value of $1 at the end of one period at 5% is 0.952381. At 5%, for period two the factor is 0.907029, and for period 3 the factor is 0.863838. 1. What is the Present Value of the Investment's Cash Inflows? 2. What is the Present Value of the Investment's Cash Outflows? 3. What is the Net Present Value of the Investment? 4. What conclusion can we make about IRR? 5. What is the IRR? 6. How can we check or prove the IRR? Bradley Corporation executes a 20-year $200,000 mortgage in conjunction with the acquisition of an office building. This mortgage is payable in annual installments and interest is 10% per year. Calculate the following: 7. The annual payment: 8. The principal amount (balance) owed on the mortgage after the first payment: 9. Over the life of the mortgage, the total amount that will be paid for interest: 10. The amount owed at the end of five years: 11. At the end of year 5, the interest rate falls to 6%, and Bradley wishes to refinance.... A. The new payment amount: B. OR, The new number of remaining paymentsStep by Step Solution
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