Question

Given the following information regarding an income producing property, determine the internal rate of return (IRR) using unlevered cash flows. Expected Holding Period: 5 years; 1st year Expected PGI: $95,000; 2nd year Expected PGI: $95,000; 3rd year Expected PGI: $95,000; 4th year Expected PGI: $95,000; 5th year Expected PGI: $95,000; Vacancy at 5% annually. Operating Expenses 40% of EGI annually. Debt Service in each of the next five years: $20,000; Current Market Value: $897,000; Required equity investment: $200,000; Gross Sales Price at end of year 5: $950,000 with Closing Expenses of $12,000 and Disposition Fee (Brokerage Commission) of 3% of Gross Sales Price.; Remaining Mortgage Balance at end of year 5: $425,000.

		7.98%
		52.68%
		6.28%
		10.7%

Answer 1