Question

Real estate finance:

React: An apartment building investment that provides a 35% expected IRR on equity is a more attractive investment than an investment of an equal amount in a supermarket anchored strip shopping center that provides a 12% IRR on equity.

Answer 1

This is a typical true or false statement.

The correct option is true

Step-by-step explanation:

The IRR is the rate of return where Net Present Value of an investment is zero.

With a IRR of 35%,it implies that a higher discount rate is used in bringing the cash flows to present terms,which means that the cash flows so discounted are worthier than cash flows whose discount rate is just 12%.

In other words, the investment in the building apartment of 35% IRR is preferable to investment of supermarket anchored stri[p shopping center