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Business, 03.04.2021 03:10 ninilizovtskt

An investor is considering the purchase of a small apartment building. The NOI is expected to be the following: year 1, $200,000; year 2, $210,000; year 3, $220,000; year 4, $230,000; year 5, $240,000. The property will be sold at the end of year 5 and the investor believes that the property value should have appreciated at a rate of 3 percent per year during the five-year period. The investor plans to pay all cash for the property and wants to earn a 10 percent return on investment (IRR) compounded annually. a) Please list the NOI from year 1 to year 5 and compute the present values of NOI for each year.
b) What should be the reversion value (REV) at the end of year5?
c) What should be the present value of the property today?

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