Chapt15prob

# Chapt15prob - NPV at \$248,075 is 0 13 \$263,853 This is a...

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Garrett Barnes Chapt 15 HW 11,12,13,14 11. V 0 = 25,000 / 1.12 (29 t + 30,000 / 1.12 (29 t + 300,000 / 1.12 (29 10 t = 6 10 t = 1 5 = \$248, 075 0 CF 0 , 25,000 CF 1 , 5 N 1 , 30,000 CF 2 , 4 N 2 , 330,000 CF 3 12 I/YR NPV 248,075 12. (a) No: NPV = \$248,075 – \$260,000 = – \$11,925 < 0 (b) 11.24% < 12.00% –260,000 CF 0 , 25,000 CF 1 , 5 N 1 , 30,000 CF 2 , 4 N 2 , 330,000 CF 3 IRR 11.24 (c) By definition: IRR at \$248,075 is 12.00%.
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Unformatted text preview: NPV at \$248,075 is 0. 13. \$263,853. This is a 6.36% increase in value (263,853/248,075 = 1.0636) from a 1 point change in discount rate. 14. \$248,075. This is a 2.65% increase in value (254,656/248075 = 1.0265) from a roughly 1 point change in market rent growth rate, even with 5 years fixed cash flows from vintage lease....
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