You have analysed the returns from a retail development proposal and predict an

Question

You have analysed the returns from a retail development proposal and predict an income stream of $65000 per year. The developer is only interested in the returns over the first 12 years, so the life of the development is taken as 12 years. If the expected interest rate over this period is 9.0% per annum what would the value of this income stream be in present worth dollars?

(Round your answer to the nearest whole number, i.e. 110536.07 = 110536. Do not include the $ sign or any spaces or commas.)

Explanation / Answer

The value is

65000/1.09 + .. + 65000/1.09^12 = $465,447

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