THE NEXT SIX (6) QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION: Janie Brown of Janie's Waffle Hut, has realized a large profit in the past three years, and now wishes to invest this money in an income-producing property. Janie's financial advisor, Ryan, has detailed several possibilities that may meet her requirements. The forecasted cash flows and acquisition costs for each property are listed below. O P Year 1 1 2 3 3 Costs (Today) M $100,000 $100,000 $100,000 N. N $0 0 $450,000 $80,000 $130,000 $217,050 $200,000 -$50,000 $150,000 $250,000 $320,000 $320,000 $250,000 1. What is the internal rate of return on Investment M, expressed as an effective annual rate? (1) 9.70% (2) 8.66% (3) 12.24% (4) 10.97% 2. What is the internal rate of return on Investment N, expressed as an effective annual rate? ) (1) 13.64% (2) 11.39% (3) 12.04% (4) 10.71% 3. What is the internal rate of return on Investment P, expressed as an effective annual rate? (1) 36.84% (2) 22.45% (3) 10.81% (4) 30.53% Assignment 7 continues next page 7.6 Lesson 7: Real Estate Investment Analysis 4. If the reinvestment rate is 12% per annum, compounded annually, what is the effective annual yield on Investment M? (1) 9.05% (2) 12.65% (3) 11.98% (4) 10.51%