Question
a.) A building is expected to generate no cash flows for several years and then generate annual cash flows forever. What is the value of
a.) A building is expected to generate no cash flows for several years and then generate annual cash flows forever. What is the value of the building if the first annual cash flow is expected in 5 years from today, the first annual cash flow is expected to be 18,150 dollars, all subsequent annual cash flows are expected to be 1.44 percent higher than the cash flow generated in the previous year, and the cost of capital for the building is 12.03 percent?
b.)What is the value of a building that is expected to generate fixed annual cash flows of 115,800 dollars every year for a certain amount of time if the first annual cash flow is expected in 4 years from today and the last annual cash flow is expected in 8 years from today and the appropriate discount rate is 11.38 percent?
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