Test your skills with this problem: S.S. Sarkar (S.S.S.), a real estate investment company, is considering investing in a shopping center. The sale price is $5,000,000 and S.S.S. expects to have positive after-tax and after-mortgage payment cash flows from rents of $550,000 for the next three years. S.S.S. can obtain a mortgage with a downpayment of $3,000,000. At the end of the third year, S.S.S. anticipates selling the shopping center for a net after-tax gain on sale of $4,500,000. If S.S.S.'s required teturn is 30%, should S.S.S. go ahead and purchase the shopping center? Fill in the inputs 1 NPV & IRR Table: year cash flow 0 (5,000,000) 550,000 2 550,000 3 5,050,000 NPV ($1,952,890) IRR 7.92% Inputs: Initial outlay (5,000,000) CF 550,000 ATGS 4,500,000 30% Calculate the NPV and the IRR. Indicate the investment decision in cell E104. Decision => What is the maximum down payment S.S.S. needs to make, assuming it does not effect the yearly cash flows, for S.S.S. to exactly meet its required retum of 30%? Hint: Use Goal Seek: set IRR (cell D100) at 0,rat 30, and the changing cell at Initial outlay. and click okay. [The amount is greater than the initial outlay of $3,000,000.] Test your skills with this problem: S.S. Sarkar (S.S.S.), a real estate investment company, is considering investing in a shopping center. The sale price is $5,000,000 and S.S.S. expects to have positive after-tax and after-mortgage payment cash flows from rents of $550,000 for the next three years. S.S.S. can obtain a mortgage with a downpayment of $3,000,000. At the end of the third year, S.S.S. anticipates selling the shopping center for a net after-tax gain on sale of $4,500,000. If S.S.S.'s required teturn is 30%, should S.S.S. go ahead and purchase the shopping center? Fill in the inputs 1 NPV & IRR Table: year cash flow 0 (5,000,000) 550,000 2 550,000 3 5,050,000 NPV ($1,952,890) IRR 7.92% Inputs: Initial outlay (5,000,000) CF 550,000 ATGS 4,500,000 30% Calculate the NPV and the IRR. Indicate the investment decision in cell E104. Decision => What is the maximum down payment S.S.S. needs to make, assuming it does not effect the yearly cash flows, for S.S.S. to exactly meet its required retum of 30%? Hint: Use Goal Seek: set IRR (cell D100) at 0,rat 30, and the changing cell at Initial outlay. and click okay. [The amount is greater than the initial outlay of $3,000,000.]