Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

is there another answer for part B? my answer was not correct You have an opportunity to acquire a property from First Capital Bank. The

is there another answer for part B? my answer was not correct
image text in transcribed
You have an opportunity to acquire a property from First Capital Bank. The bank recently obtained the property from a borrower who defaulted on his loan. First Capital is offering the property for $296,000. If you buy the property, you believe that you will have to spend (1) $12,100 on various acquisition-related expenses and (2) an average of $3,600 per month during the next 12 months for repair costs, and 50 on, in order to prepare it for sale. Because First Capital Bank would like to sell the property as soon as possible, it is willing to provide $276,000 in financing at 4.25 percent interest for 12 months payable monthly (interest only). Your market research indicates that after you repair the property, it may sell for about $350,000 at the end of one year. Furthermore, you will probably have. to pay about $4,600 in fees and selling expenses in order to sell the property at that time. Required: a. If you wanted to carn a 20 percent return compounded monthly, do you believe that this would be a good investment? b. What would you need to sell the property for in order to achieve the 20 percent return? (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Entrepreneurial Finance

Authors: Philip J. Adelman, Alan M. Marks

4th Edition

0132434792, 9780132434799

More Books

Students also viewed these Finance questions

Question

What applied experiences do you have? (For Applied Programs Only)

Answered: 1 week ago