Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Interest rate Initial Capital Number of years 2.83% 648074.00 9 Initial value flat 1 Initial value flat 2 Rent 1 Rent 2 Maintenance 1 Maintenance
Interest rate Initial Capital Number of years 2.83% 648074.00 9 Initial value flat 1 Initial value flat 2 Rent 1 Rent 2 Maintenance 1 Maintenance 2 Increase 1 Increase 2 Increase in maintenance 1 Increase in maintenance 2 (as % of rent increa: Taxes Increase in value 486056.00 162018.00 1125.00 675.00 56.25 37.50 4.00% 67.56 0.40% 6.50% 14.00% 1.83% Task 3: rental income to achieve 5% IRR. The investor has a target yield in mind of 5% p.a. effective. Find, by a method of your choice, the minimum value of the initial rent for the first flat that would guarantee a 5% p.a. internal rate of return (effective) for the whole project, without changing any of the other parameters (rate of rental increases, the second flat rental value, the maintenance values, etc.). You should document your method carefully in your report, and justify your choice of method. The calculations should be clear from your spreadsheet and report. You are free to create an additional worksheet if that would be helpful, and you should not allow this task to make it harder to understand the worksheets for the previous two tasks. Interest rate Initial Capital Number of years 2.83% 648074.00 9 Initial value flat 1 Initial value flat 2 Rent 1 Rent 2 Maintenance 1 Maintenance 2 Increase 1 Increase 2 Increase in maintenance 1 Increase in maintenance 2 (as % of rent increa: Taxes Increase in value 486056.00 162018.00 1125.00 675.00 56.25 37.50 4.00% 67.56 0.40% 6.50% 14.00% 1.83% Task 3: rental income to achieve 5% IRR. The investor has a target yield in mind of 5% p.a. effective. Find, by a method of your choice, the minimum value of the initial rent for the first flat that would guarantee a 5% p.a. internal rate of return (effective) for the whole project, without changing any of the other parameters (rate of rental increases, the second flat rental value, the maintenance values, etc.). You should document your method carefully in your report, and justify your choice of method. The calculations should be clear from your spreadsheet and report. You are free to create an additional worksheet if that would be helpful, and you should not allow this task to make it harder to understand the worksheets for the previous two tasks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started