Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

I need assistance answering the attached 13 questions. 1. A tenant offers to sign a lease paying a rent of $2,500 per month for 10

image text in transcribed

I need assistance answering the attached 13 questions.

image text in transcribed 1. A tenant offers to sign a lease paying a rent of $2,500 per month for 10 years (120 months). At 0.75% of monthly interest rate, what is the present value of this lease? 2. A building is expected to require $1,000,000 in capital improvement expenditures in five years (60 months). The building's net operating cash flow prior to that time is expected to be at least $20,000 at the end of every month. How much of that monthly cash flow must the owners set aside each month in order to have the money available for the capital improvements, assuming monthly interest rate is 1.5%? 3. A real estate investor feels that the cash flow from a property will enable her to pay a lender $20,000 per year, at the end of every year, for eight years. How much should the lender be willing to loan her if he requires a 7.5% annual interest rate (monthly compounded, assuming the first of the eight equal payments arrives one year from the date the loan is disbursed)? 4. If you invest $10,000 and it grows at annual rate of 15% (compounded annually), how many months it will take to grow to $20,000? 5. How much will a $100 deposit made today be worth in 10 years if interest is compounded daily at an annual rate of 10% 6. Sommers Co.'s bonds currently sell for $1,080 and have a par value of $1,000. They pay a $100 annual coupon and have a 10-year maturity, but they can be called in 5 years at $1,125. What is their yield to maturity (YTM) 7. A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price? 8. You are hoping to buy a new boat 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% annual interest and compounded quarterly. How much will you have just after you make the 3rd deposit, 3 years from now? 9. Meacham Enterprises' bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 7 years at $1,050. What is their yield to call (YTC) 10. Curtis Corporation's noncallable bonds currently sell for $1,165. They have a 15-year maturity, an annual coupon of $97, and a par value of $1,000. What is their yield to maturity? 11. John owns a 5-story office building with total square footage of 125,000. He acquired the investment for $2,500,000. The land represents 30% of his investment. What is John's annual depreciation deduction? 12. If you invest $10,000 today and it grows at annual rate of 15% (compounded monthly), how many months it will take to grow to $20,000? 13. You buy a house of $800,000 today. You put a down payment of 20% and borrow a fixedrate mortgage of $640,000 with monthly payments, annual interest rate of 3.5% and 30 years. After 5 years, market interest rate goes up to 6.5%. How much money will you make in book from the mortgage if you continue to pay the monthly mortgages for the next 25 years and the market interest rate will stay the same as 6.5%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistics Informed Decisions Using Data

Authors: Michael Sullivan III

5th Edition

978-0134135373, 134133536, 134135377, 978-0134133539

Students also viewed these Finance questions