Present Value of a Project

• Consider the following information about a project. What is the NPV.

PGI	10,000
Vacancy	5.0%
Expenses (% of EGI)	10.0%
Growth in PGI 3%	3.0%
Hold period years	5.0%
Terminal cap rate	9.0%
Discount rate	12.0%
Initial cost	90,000

Bonus Question

• A property sells for $200,000 with seller financing at 3 percent for 30 years with monthly payments. The loan to value ratio (LTV) is 80 percent (purchaser makes a down payment of 20 percent). If market interest rates are 6 percent what is the cash equivalent price of this sale?