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Q2. Assume you are considering investing in an apartment building with the following estimated financial characteristics:
- Net operating income (NOI) = $64,000.
- Net operating income growth rate = 4% per year.
- Tax depreciation = $25,000 per year.
- Annual interest expense = $32,000.
- Annual debt service expense = $35,000.
- Equity investors marginal income tax rate = 36%.
- Investment horizon = 2 years.
- Net purchase price = $500,000.
- Equity investment = 30%.
- Gross sale price = $650,000.
- Cost of sale = $50,000.
- Outstanding mortgage balance at time of sale = $385,000.
- The tax rate on recaptured depreciation = 28%.
- Long-term capital gains tax rate = 20%.
- Required after tax return on equity = 6%.
The net present value (NPV) and internal rate of return (IRR) for this investment are closest to:
NPV IRR
A) $61,095 27%
B) $51,977 19%
C) $99,994 47%
[此贴子已经被作者于2009-3-10 10:22:11编辑过] | 
发表于 2009-3-10 10:17
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