Business
Business, 06.11.2019 21:31, babas97

The buyer of the property above is interested in the property and believes they can turn a profit under the right circumstances. their perceived rental income would be $175,000 in year 1 with an increase in rent by 3% per year after. however, in order to garner the return the buyer believes is possible it will take an upgrade of the interior immediately costing $300,000 followed by small renovation projects of $50,000 per year thereafter. the buyer believes that if they can put forth this effort they will be able to sell the property for $4.25m at the end of the 6th year with a sales commission of 1.5% of sales price that will need to be paid (sales commission is deducted from the sales price). is this a good investment for the buyer on a before tax basis (calculate the internal rate of return and justify your answer)?

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