1. How much would you pay for the right to receive $30,000 at the end of 8 years if you can earn a 12% return on a real estate investment with similar risk?
2. What constant amount invested at the end of each year at 8.5% annual interest rate will be worth $12,000 at the end of six years?
3. Your father will convey a property to you in 15 years. If the property is expected to be worth $350,000 when you receive it, what is the present value of the property? Your discount rate is 11.5%.
4. What is the NPV of $1,000 received at the end of the next four years and $1,800 received at the end of the fifth year if your required return is 10%?
Year 1 2 3 4 5
5. Assuming no income or holding costs during the period, if you purchased a vacant parcel of land eight years ago for $1,150,000, how much would you have to sell it
for today in order to yield a 12% annual return on your investment?