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You are interested in investing in a rental property that cost $125,000. Conflicted on if you should invest in the property or invest in the
You are interested in investing in a rental property that cost $125,000. Conflicted on if you should invest in the property or invest in the stock market, you decide to run a Net Present Value calculation to determine if the rental property is a good investment based upon the details below. Present Value: $125,000 Projected Annual Cash Flow: (Year 1-6): $12,000 Projected Annual Cash Flow: (Year 7-12): $24,000 Interest Rate: 6% Task: 1. In excel, prepare a Net Present Value for your rental property 2. What is the rate of return on your investment in the rental property (see formula below)? 3. Is it better to invest in the rental property or invest in the stock market? Rate of Return Formula: Radie off Rettuar 1 W Wi V-Ending Value of Investment (total value of all future cash flows) V Initial Investment
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