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Given the following information regarding an income producing property, determine the internal rate of return (IRR)...

  1. Given the following information regarding an income producing property, determine the internal rate of return (IRR) using levered cash flows. Expected Holding Period: 5 years; 1st year Expected PGI: $91,000; 2nd year Expected PGI: $91,000; 3rd year Expected PGI: $91,000; 4th year Expected PGI: $91,000; 5th year Expected PGI: $91,000; Vacancy 3% annually; Other Income $10,000 annually; Operating Expenses 40% of EGI annually. Debt Service in each of the next five years: $30,000; Purchase Price: $875,000; Required equity investment: $225,000; Gross Sales Price at end of year 5: $975,000 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: $630,000.

    22.80%

    23.98%

    -13.92%

    17.79%

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