Applying Time Value. You can buy property today for $3 million and sell it in 5 years

Question:

Applying Time Value. You can buy property today for $3 million and sell it in 5 years for

$4 million. (You earn no rental income on the property.)

a. If the interest rate is 8 percent, what is the present value of the sales price?

b. Is the property investment attractive to you? Why or why not?

c. Would your answer to

(b) change if you also could earn $200,000 per year rent on the property?

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Answered By

Ali Khawaja

my expertise are as follows: financial accounting : - journal entries - financial statements including balance sheet, profit & loss account, cash flow statement & statement of changes in equity -consolidated statement of financial position. -ratio analysis -depreciation methods -accounting concepts -understanding and application of all international financial reporting standards (ifrs) -international accounting standards (ias) -etc business analysis : -business strategy -strategic choices -business processes -e-business -e-marketing -project management -finance -hrm financial management : -project appraisal -capital budgeting -net present value (npv) -internal rate of return (irr) -net present value(npv) -payback period -strategic position -strategic choices -information technology -project management -finance -human resource management auditing: -internal audit -external audit -substantive procedures -analytic procedures -designing and assessment of internal controls -developing the flow charts & data flow diagrams -audit reports -engagement letter -materiality economics: -micro -macro -game theory -econometric -mathematical application in economics -empirical macroeconomics -international trade -international political economy -monetary theory and policy -public economics ,business law, and all regarding commerce

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