Solution_to_Assignment_3

Solution_to_Assignment_3 - d. I = 8% year Rental Year Rent...

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Solution to Assignment 3 Prepared by Keyi Xu Problem 1 a. PV = $1,000,000 I = 10% N = 5 Pmt = $263,797.48 Year Pmt PV of Pmt Weight 1 $263,797.48 $239,815.89 0.2398 2 $263,797.48 $218,014.45 0.4360 3 $263,797.48 $198,194.95 0.5946 4 $263,797.48 $180,177.23 0.7207 5 $263,797.48 $163,797.48 0.8190 Macaulay Duration: 2.8101 Modified Duration: 2.5547 b. Market Yield = 10% Mortgage Price: $1,000,000.00 c. Market Yield = 9% Estimated % increase in Mortgage Value: 2.55% Actual Loan % increase in Price: 2.61% Problem 2 a. I = 8% year Rental Year CF 0 1 0 1 2 20 2 3 20 3 4 20 4 5 20 5 6 20 6 7 20 7 8 20 PV: $104.13 Eff Rent: $16.78 (consider pay upfront evrey year) b. I = 8% year Rental Year CF PVCF 0 1 12 12 1 2 13.5 12.5 2 3 15 12.86
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3 4 16.5 13.1 4 5 18 13.23 5 6 19.5 13.27 6 7 21 13.23 7 8 22.5 13.13 PV: $103.32 Eff Rent: $16.65 (consider pay upfront evrey year) c. I = 8% year Rental Year CF PVCF 0 1 12 12 1 2 12.36 11.44 2 3 12.73 10.91 3 4 13.11 10.41 4 5 13.51 9.93 5 6 13.91 9.47 6 7 14.33 9.03 7 8 14.76 8.61 PV: $81.80 Eff Rent: $13.18 (consider pay upfront evrey year)
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Unformatted text preview: d. I = 8% year Rental Year Rent Exp TotalCF PVCF 1 10-5 5 5 1 2 10-5.1 4.9 4.54 2 3 10-5.2 4.8 4.11 3 4 10-5.31 4.69 3.73 4 5 10-5.41 4.59 3.37 5 6 10-5.52 4.48 3.05 6 7 10-5.63 4.37 2.75 7 8 10-5.74 4.26 2.48 PV: $29.03 Eff Rent: $4.68 (consider pay upfront evrey year) e. I = 8% year Rental Year Rent Exp TotalCF PVCF 1 10-5 5 5 1 2 10-5 5 4.63 2 3 10-5 5 4.29 3 4 10-5 5 3.97 4 5 10-5 5 3.68 5 6 10-5 5 3.4 6 7 10-5 5 3.15 7 8 10-5 5 2.92 PV: $31.03 or $31.03 Eff Rent: $5.00 (consider pay upfront evrey year) f. I = 8% year Rental Year Rent TI TotalCF PVCF 1 20-15 5 5 1 2 20 20 18.52 2 3 20 20 17.15 3 4 20 20 15.88 4 5 20 20 14.7 5 6 20 20 13.61 6 7 20 20 12.6 7 8 20 20 11.67 PV: $109.13 or $31.03 Eff Rent: $17.58 (consider pay upfront evrey year)...
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This note was uploaded on 05/12/2008 for the course REAL ESATE 410 taught by Professor Chu during the Spring '08 term at Wisconsin.

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Solution_to_Assignment_3 - d. I = 8% year Rental Year Rent...

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