Question
You have an opportunity to purchase rental real estate. Your required return on your investment is 11 %. The initial investment in the property is
You have an opportunity to purchase rental real estate.
Your required return on your investment is 11 %.
The initial investment in the property is $325,000. You have done your research and have forecasted a monthly rental income of $ 2,400 per month. You intend to hold on to this investment at least 5 years and at the end of five years hope to sell at $370,000.
What is the net present value and internal rate of return of this investment? Is the net present value and internal rate of return in agreement?
| A. | $1,018, 11.1%, NPV and IRR agrees | |
| B. | -$1, 218, 11.5%, NPV and IRR are not in agreement | |
| C. | $1,018, 10.5%, NPV and IRR are not in agreement. | |
| D. | $2,089, 11.1%, NPV and IRR agrees |
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