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I need these following questions answered.
1. You have just had a tenant sign a lease contract that guarantees you payments of $100,000 at the end of each year for the next five years. What is the present value of these future cash flows assuming an 8% discount rate?
2. Suppose an investor deposits $2500 in an interest-bearing account at her local bank. The account pays 2.5% interest compounded annually. If the investor plans on withdrawing the original principal plus accumulated interest at the end of 7 years, what is the total amount that she should expect to receive assuming interest rates do not change?
3. An investor agreed to sell a warehouse 5 years from now to the tenant who currently rents the space. The tenant will continue to pay $20,000 rent at the end of each year including year five in which he will purchase the building for an additional $150,000. Assuming the investor’s required rate of return is 10%, how much is this deal presently worth to the investor who was willing to sell?
4. Assuming that an investor requires a 10% annual yield over the next 12 years, how much would she be willing to pay for the right to receive $20,000 at the end of year 12?
5. The purchase price of an income producing property today is $570,000. After analysis of the expected future cash flows, expected sales price, and expected yield, the investor determines that the future cash flows have a present value (PV) of $580,000. Taking into consideration the price of the property today, what is the net present value (NPV) of this investment opportunity, and should the investor take the deal?
6. Suppose an investor is interested in purchasing the following income producing property at a current market price of $450,000. The prospective buyer has estimated the expected cash flows over the next four years to be as follows: Year 1 = $40,000, Year 2 = $45,000, Year 3 = $50,000, Year 4 = $55,000. Assuming that the required rate of return is 12% and the estimated proceeds from selling the property at the end of year four is $500,000, what is the NPV of the project?
7. If someone pays you $1.00 per year for 20 years, what is the present value of the series of future payments discounted at 10% annually?
8. If you deposit $10.00 at the end of each year for the next 10 years and these deposits earn 10% compounded annually, what will the series of deposits be worth at the end of 10 years?
9. You are considering the purchase of a small income-producing property for $150,000 that is expected to produce $50,000 of cash flows for four years. Assume your required return is 11%. What is the Net Present Value of this investment opportunity? What is the going-in internal rate of return on this investment?
10. You have signed a new lease today to rent office space for five years. The lease payments are fixed at $4,500 per month for years 1 and 2, but rise to $5,500 for years 3 to 5. What is the present value of this lease obligation if the appropriate discount rate is 8%
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