I was given this test for an acquisitions analyst role. My main concern is the assumptions for the real estate deal, particularly how to invest continuously in the same transaction. It seems too complex to do a debt/equity waterfall model when just comparing investment value after a certain amount of time. The IRA was a simple NPV cashflow model. Can anyone give me some input here?
1) Prepare a basic financial model comparing a standard 401k investment with a typical real estate transaction. You can make any assumptions you would like regarding the real estate transaction, but please be prepared to explain your logic. Use the following assumptions for the 401k:
100% match of up to 4% of a 60k per year salary
Retire and withdraw 401k at age 65
You are able to invest in the same real estate transaction continuously over the allotted time