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An investor has projected three possible scenarios for a project as follows: Pessimistic-NOI will be...

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An investor has projected three possible scenarios for a project as follows: Pessimistic-NOI will be $215,000 the first year, and then decrease 2 percent per year over a five-year holding period. The property will sell for $1.86 million after five years. Most likely- NOI will be level at $215,000 per year for the next five years (level NOn and the property will sell for $2.15 million. Optimistic-NOI will be $215,000 the first year and increase 3 percent per year over a five-year holding period. The property will then sell for $2.50 million. The asking price for the property is $2.15 million. The investor thinks there is about a 30 percent probability for the pessimistic scenario, a 40 percent probability for the most likely scenario, and a 30 percent probability for the optimistic scenario. Required: a. Compute the IRR for each scenario. b. Compute the expected IRR. c. Compute the variance and standard deviation of the IRRS

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