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You expect to receive the annual property Net Operating Income (NOI) from a certain property as follows Year 1 Year 2 Year 3 Year 4
You expect to receive the annual property Net Operating Income (NOI) from a certain property as follows Year 1 Year 2 Year 3 Year 4 Year 5 $20,000 22,000 $30,000 31,000 40,000 In addition, you expect that you can sell the property at the end of the 5th year for 10 times its expected NOI of that year. A. If your opportunity cost of capital (OCC) is 10%, 1) What is the Present Value of the Property Income over the 5 years? 2) What is the Present Value of the Net Sales Proceeds received in Year 5 3) What is the Total Present Value of the property given the 5 year holding period? 4) Ifyou offer to pay the amount you calculate in Ques A3) above to purchase the property, what would be your total return on the investment? 5) If you offer to pay the amount you calculate in Ques A3) to purchase the property, what do you forecast to be the appreciation in value on the property If you pay $350,000 for the property at Year 0, what is the net present value (NPV) of a deal? B. C. In the situation given in the previous question, what is the IRR
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