You can buy property today for $3.5 million and sell it in 4 years for $4.5 mill
ID: 2651909 • Letter: Y
Question
You can buy property today for $3.5 million and sell it in 4 years for $4.5 million. (You earn no rental income on the property.)
If the interest rate is 9.25%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
What is the present value of the sales price, if you also could earn $250,000 per year rent on the property? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
You can buy property today for $3.5 million and sell it in 4 years for $4.5 million. (You earn no rental income on the property.)
Explanation / Answer
Ans
Workings
c)
Workings
c2) Investment is atttractive since NPV is positve .
a) Present value of sales price at the interest rate of 9.25% in Millions $3.159Related Questions
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