SlammedAcroRam
+1y
I'm working on a problem for a class of mine. Its worth like 10% of my grade so I'd like to make sure I have the right answers. I have to show my work but I would be interested in any help someone could give me. Feel free to send me an e-mail or PM. The problem is as follows:
You are considering the purchase of an apartment building. You have surveyed the market and have made the following assumptions/predictions.
PGI = $25,390 for the coming year, increasing at 3% per year thereafter.Vacancies and Bad Debts = 4.90% of PGI.Operating Expenses = 43.90% of EGI.Asking Price = $143,900.Acquisitions costs are 2% of the purchase price.Financing: 80% LV, 11.90% interest, 25 years.Financing costs are 2.5% of the loan amount.Depreciation: 90% of the purchase price is depreciable. The property value is expected to increase 5% per year.Selling expenses are expected to be 7. 390% of selling price.Assume you purchase the property on January 1st and plat to sell approximately 5 years later on December 31stAssume the tax rate is 28%
Generate neat schedules for EI, ATCF, and ATER. However, place your final answers here:
EI = _______________________ATCF(1) = __________________ATCF(2) = __________________ATCF(3) = __________________ATCF(4) = __________________ATCF(5) = __________________ATER = _____________________
The IRR for this project = ___________________
If your required rate of return is 12.39%, the NPV for this project = ______________________
Should you purchase this property? Circle one: YES NO