Name: Homework 4

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Instructions:  

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Question 1   Multiple Answer (1.0000 points)
  Question: Using discounted cash flow analysis, what is the most an investor wishing to get at least a 10% return should pay for an investment expected to have the following annual cash flows at the end of each year:
Year 1: $15,100
Year 2: $16,400
Year 3: $16,800
Year 4: $16,700
Year 5: $18,100 + $188,000 when the investor sells the property at that time.
(Check the correct answer.)
 
 
    $271,100
$162,983
$168,669
$179,281
$269,908
 
 

 

Question 2   Multiple Answer (1.0000 points)
  Question: Using discounted cash flow analysis, what is the most an investor wishing to get at least a 10% return should pay for an investment expected to have the following annual cash flows at the end of each year:
Year 1: $6,000
Year 2: $6,400
Year 3: $6,800
Year 4: $6,700
Year 5: $7,100 + $81,000 when the investor sells the property at that time. (Check the correct answer.)
 
 
    $113,495
$75,132
$68,302
$114,000
$70,560
 
 

 

Question 3   Multiple Choice (1.0000 points)
  Question: Using the Ellwood formula, estimate the required overall rate for an investor who is expected to put down 20%, desires a 13% equity yeild, expects the property to increase 7% during his/her 11 year holding period, and expects to finance the balance of the purchase with a 30 year, monthly payment loan at 9.00% interest.
 
 
    .1020
.0988
.0945
.0956
.0877
 
 

 

Question 4   Multiple Answer (1.0000 points)
  Question: Using the Ellwood formula, estimate the required overall rate for an investor who is expected to put down 25%, desires a 13% equity yeild, expects the property to decrease 16% during his/her 10 year holding period, and expects to finance the balance of the purchase with a 30 year, monthly payment loan at 8.75% interest. (Check the correct answer.)
 
 
    .0901
.0913
.0988
.1065
.1075
 
 

 

Question 5   Multiple Answer (1.0000 points)
  Question: Using the Ellwood formula, estimate the required overall
rate for an investor who is expected to put down 25%,
desires a 14% equity yeild, expects the property to
decrease 11% during his/her 9 year holding period, and
expects to finance the balance of the purchase with a 30
year, monthly payment loan at 10.25% interest.
(Check the correct answer.)
 
 
    .1190
.1054
.1259
.1153
.1300