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8.) The annual earnings of a rental apartment are expected to be...
3. You invest in a rental property at $300,000. You estimate that the annual cost of...
3. You invest in a rental property at $300,000. You estimate that the annual cost of maintaining the property is $600 a month and the rental revenue is $3,000 a month. What is the annual rate of return after 5 years, 15 years and 30 years? What would your decision be in regard to this opportunity?
Suppose that annual income from a rental property is expected to start at $1,350 per year...
Suppose that annual income from a rental property is expected to start at $1,350 per year and decrease at a uniform amount of $60 each year after the first year for the 12-year expected life of the property. The investment cost is $7,700, and iis 8% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one. Click the icon to view the interest...
answer q4 only 3. You invest in a rental property at $300,000. You estimate that the...
answer q4 only
3. You invest in a rental property at $300,000. You estimate that the annual cost of maintaining the property is $600 a month and the rental revenue is $3,000 a month. What is the annual rate of return after 5 years, 15 years and 30 years? What would your decision be in regard to this opportunity? 4. For problem 3, assume you sell the property after 5 years, 15 years, or 30 years for $350,000. How does...
Your grandpa wants to present you with a small apartment on your 30thbirthday. The apartment is...
Your grandpa wants to present you with a small apartment on your 30thbirthday. The apartment is expected to cost $400,000 then. He wants to invest in a 10 year CD (certificate of deposit) on your 20thbirthday so that it grows to be $400,000 on your 30thbirthday. What is amount should he deposit, if the CD pays an interest rate of 8% per annum, and the tax rate on interest income is 25%?
You would like to invest $128327 in an investment that has an expected rate of return...
You would like to invest $128327 in an investment that has an expected rate of return of 13.38%. You plan to borrow 61% of the money ($78279.47) from a friend, so that you will put up $50047.53 of your own money. The cost of debt (interest rate on the loan) is 10.62% and there are no taxes or transaction costs. With the arrangement, what will be the expected rate of return on your equity investment of $50047.53? (Percent with...
You would like to invest $125396 in an investment that has an expected rate of return...
You would like to invest $125396 in an investment that has an expected rate of return of 17.52%. You plan to borrow 27% of the money ($33856.92) from a friend, so that you will put up $91539.08 of your own money. The cost of debt (interest rate on the loan) is 11.78% and there are no taxes or transaction costs. With the arrangement, what will be the expected rate of return on your equity investment of $91539.08? (Percent with 2...
You would like to invest $109543 in an investment that has an expected rate of return...
You would like to invest $109543 in an investment that has an expected rate of return of 17.34%. You plan to borrow 61% of the money ($66821.23) from a friend, so that you will put up $42721.77 of your own money. The cost of debt (interest rate on the loan) is 13.76% and there are no taxes or transaction costs. With the arrangement, what will be the expected rate of return on your equity investment of $42721.77? (Percent with 2...
Suppose an investor is considering a non-residential rental property that has an asking price of $400,000....
Suppose an investor is considering a non-residential rental property that has an asking price of $400,000. The land is valued at $175,000. The property has four rental units that are expected to rent for $1.200 each per month for the next five years (PGI each year of $57,600). Vacancy and bad debt allowance is expected to be 5% of potential gross income Operating expenses are expected to be 16% of effective gross income. A mortgage loan is available for 80%...
You've got lucky and about to get married. You are looking for an apartment to buy....
You've got lucky and about to get married. You are looking for an apartment to buy. Your savings from apartment cost is $400,000 in cash. You would like to mortgage the apartment in 4 years. You have two options: Saudi Banks: takes 2% annual interest on the whole loan. • US Banks: takes 6% annually on remaining principle. Compare the two options. From a sole economic point of view, which option shall you go with?
Need help, please show work for solutions. 1.) An investor just invested $10,000 in an investment that is expected to ea...
Need help, please show work for solutions. 1.) An investor just invested $10,000 in an investment that is expected to earn a 6% interest rate. Assuming the 6% annual return is realized, what will be the value of the investment at the end of 25 years? 2.) If you deposit $45,000 into a 5-year CD today earning 4% interest compounded quarterly, what would be the account balance be at the end of 5 years? 3.) A 22-year old college student...
3. You invest in a rental property at $300,000. You estimate that the annual cost of maintaining the property is $600 a month and the rental revenue is $3,000 a month. What is the annual rate of return after 5 years, 15 years and 30 years? What would your decision be in regard to this opportunity?
Suppose that annual income from a rental property is expected to start at $1,350 per year and decrease at a uniform amount of $60 each year after the first year for the 12-year expected life of the property. The investment cost is $7,700, and iis 8% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one. Click the icon to view the interest...
answer q4 only
3. You invest in a rental property at $300,000. You estimate that the annual cost of maintaining the property is $600 a month and the rental revenue is $3,000 a month. What is the annual rate of return after 5 years, 15 years and 30 years? What would your decision be in regard to this opportunity? 4. For problem 3, assume you sell the property after 5 years, 15 years, or 30 years for $350,000. How does...
You would like to invest $125396 in an investment that has an expected rate of return of 17.52%. You plan to borrow 27% of the money ($33856.92) from a friend, so that you will put up $91539.08 of your own money. The cost of debt (interest rate on the loan) is 11.78% and there are no taxes or transaction costs. With the arrangement, what will be the expected rate of return on your equity investment of $91539.08? (Percent with 2...
You would like to invest $109543 in an investment that has an expected rate of return of 17.34%. You plan to borrow 61% of the money ($66821.23) from a friend, so that you will put up $42721.77 of your own money. The cost of debt (interest rate on the loan) is 13.76% and there are no taxes or transaction costs. With the arrangement, what will be the expected rate of return on your equity investment of $42721.77? (Percent with 2...
Suppose an investor is considering a non-residential rental property that has an asking price of $400,000. The land is valued at $175,000. The property has four rental units that are expected to rent for $1.200 each per month for the next five years (PGI each year of $57,600). Vacancy and bad debt allowance is expected to be 5% of potential gross income Operating expenses are expected to be 16% of effective gross income. A mortgage loan is available for 80%...
You've got lucky and about to get married. You are looking for an apartment to buy. Your savings from apartment cost is $400,000 in cash. You would like to mortgage the apartment in 4 years. You have two options: Saudi Banks: takes 2% annual interest on the whole loan. • US Banks: takes 6% annually on remaining principle. Compare the two options. From a sole economic point of view, which option shall you go with?
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