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You are considering the purchase of an apartment complex. Purchase price: $775,000 Holding period is four years Cap rate is expected to be 7% in
You are considering the purchase of an apartment complex.
- Purchase price: $775,000
- Holding period is four years
- Cap rate is expected to be 7% in year 4
- Selling expenses will be 5% of the sale price
- The 4-year Treasury bill rate is 3% and your risk premium for this project is 8%
| Year | NOI |
| 1 | $103,085 |
| 2 | $108,361 |
| 3 | $113,875 |
| 4 | $119,636 |
| 5 | $125,651 |
- Calculate the NPV of this project assuming that you do not take any mortgages
- You take a $620,000 mortgage. Your annual debt payment is $54,593. The outstanding loan balance at the end of year 4 is $596,558. Calculate the NPV of this project.
Please show work on excel or how to do on calculator
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Authors: George Milton
1st Edition
979-8847822169
