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This queation has 3 different parts, please help solve A-C Pessimistic-NOl will be $240,000 the first year, and then decrease 2 percent per year over
This queation has 3 different parts, please help solve A-C
Pessimistic-NOl will be $240,000 the first year, and then decrease 2 percent per year over a fixe-year holding period. The property will sell for $1.96 million after five years. Most likely-NOl will be level at $240,000 per year for the next five years (level NOn and the property will sell for $2.40 milion Optimistic-NOI will be $240,000 the first year and increase 3 percent per year over a five-year holding period. The property will then sell for $3.00 million. The asking price for the property is $2.40 million. The investor thinks there is about a 30 percent probablity for the pessimistic scenario, a 40 percent probability for the most likely scenario, and a 30 percent probability for the optimistic scenario. Required: a. Compute the IRR for each scenario. b. Compute the expected IRR. c. Compute the variance and standard deviation of the IRRS Step by Step Solution
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