Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You analyzed a possible 4 year investment for your firm, and calculated an IRR of 17.8% for the investment and the corresponding cash flows over

image text in transcribed

You analyzed a possible 4 year investment for your firm, and calculated an IRR of 17.8% for the investment and the corresponding cash flows over the life of the investment. You were instructed to then partition the IRR to determine what portion of the return comes from the property cash flow vs the property sale in year 4. The PRESENT VALUES you calculated for years 1- 4 were $8,487, $10,804, $12,226 and $11,414, respectively, for the property flows. Terminal value in year 4 was $57,069 also in present value terms. What portion of your total return comes from property flows, and what was the amount of the original investment (Year 0 outlfow), respectively? a. 42.9%, $100,000 b. 57.1%, $75,000 c. 63.2%, $100,000 d. 42.9%, $42,931

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

Finance Of International Trade

Authors: Eric Bishop

1st Edition

0750659084, 978-0750659086

More Books

Students also viewed these Finance questions