Posted by **Quentin** on Monday, July 19, 2010 at 10:35pm.

Year Cash Flow

1 $695,000

2 876,250

3 1,057,500

4 1,238,750

5 1,420,000

1. Calculate the IRR and NPV of this project utilizing a 12% discount rate and a 15% cap rate. Ms. Brown

was able to secure a loan for $1,540,000, and an equity investor agreed to invest the remaining

$660,000 in exchange for 20% ownership in the project.

2. What is the loan-to-value ratio for this project?

3. What would the investorâ€™s ROI be for this 5-year project if the restaurant achieved its budgeted operating

results for the year?

4. If the investor has a hurdle rate of 15%, does this project meet or exceed the investorâ€™s requirements?

Concept Check

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