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

Given the following information regarding an income producing property, determine the unlevered internal rate of return (IRR): expected holding period: five years; 1st year expected NOI: $89,100; 2nd year expected NOI: $91,773; 3rd year expected NOI: $94,526; 4th year expected NOI: $97,362; 5th year expected NOI: $100,283; debt service in each of the next five years: $58,444; current market value: $885,000; required equity investment: $221,250; net sale proceeds of property at end of year 5: $974,700; remaining mortgage balance at end of year 5: $331,026.

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Answer #1

A B 1 2 Calculation of IRR Year Cash flow 0 -885000 5 1 89100 6 2 91773 7 3 94526 8 4 97362 9 5 1074983 10 IRR 12.21%

Excel formula:

2 Calculation of IRR 3 Year 40 5 1 62 73 84 95 Cash flow -885000 89100 91773 94526 97362 =100283+974700 =IRR(B4:B9) IRR

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