MIME-Version: 1.0 Content-Type: multipart/related; boundary="----=_NextPart_01C4B888.5DE7C570" This document is a Single File Web Page, also known as a Web Archive file. If you are seeing this message, your browser or editor doesn't support Web Archive files. Please download a browser that supports Web Archive, such as Microsoft Internet Explorer. ------=_NextPart_01C4B888.5DE7C570 Content-Location: file:///C:/6457A213/IrregularCashFlowProblems.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" Irregular Cash Flow Problems

Irregular Cash Flow Problems=

 

Problem 1

 = ;

A. What is the present worth of the following cash fl= ows?

 = ;

The property contains 10,000 sf<= /span>. The market rent at reversion is 5% more than the last year's rental payment= . = The reversionary cap rate is 9.5%. The discount rate is 11.5%.

 = ;

Y= ear

1-5

6-10

11-15 16-20 21-25 Reversion

$ 5,000

$ 6,000

$ 7,500

$ 8,500

$= 9,500 see abov= e

B. What is the going in cap rate? Problem 2

 = ;

What would an investor be willing to pay for the following cash flows at a discount rate of 10%? The reversion is based on l= and value: the improvements will have no contributory value at the end of the term. Current land value is $250,000: land prices a= re expected to appreciate @ 2%/ year.

 


Y= ear        &= nbsp;           &nbs= p;        $

1-5=             &nb= sp;            =             &nb= sp;      $        &= nbsp; 35,000<= o:p>

= 6   &nb= sp;            =             &nb= sp;            =      $      = ;    15,000

7-9=             &nb= sp;            =             &nb= sp;      $        &= nbsp; 40,000<= o:p>

10-12            &= nbsp;           &nbs= p;            &= nbsp;  $        &= nbsp; 42,000<= o:p>

13-14            &= nbsp;           &nbs= p;            &= nbsp;  $        &= nbsp; 50,000<= o:p>

Reversion            =             &nb= sp;         see = above

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