Home / Questions / MRR

MRR

MRR=ATCFs(year t+1)+ATCF0(year t+1)-ATCFs(year t) ATCFs(year t) A property could be sold today for $2 million. It has a loan balance of $1 million and, if sold, the investor would incur a capital gains tax of $250,000. The investor has determined that if it were sold today, she would earn an IRR of 15% on equity for the past 5 years. If not sold, the property is expected to produce after-tax cash flow of $50,000 over the next year. at the end of the year, the property value is expected to increase to $2.1 million, the loan balance would decrease to $900,000 and the amount of capital gains tax due is expected to increase to $225,000. a. What is the marginal rate of return for keeping the property one additional year? b. What advice would you give the investor?

 

Jun 03 2020 Read more Less More

Answer (Solved)

question Subscribe To Get Solution

Recent Questions

Chat Now

Welcome to Live Chat

Welcome to MyCourseHelp Services, World's leading Academic solutions provider with Millions of Happy Students.

Please fill in the form