Suppose you have developed the following information for a potential investment: current market value is $1,250,000; anticipated loan to value ratio is .80 with 2 points; and predicated cash flows of ATCF1 = $38,560, ATCF2 = $41,780, ATCF3 = $37,210, ATCF4 = $39,127, and ATER4 = $191,730. Further, assume the investor's minimum required after-tax rate of return on equity is 12%.
a. What is the internal rate of return on this potential investment?
b. What is the profitability index on this investment?
Calculate the internal rate of return(IRR) and profitability index as follows:
Formulas:
Get Answers For Free
Most questions answered within 1 hours.