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A building will have a net rent of $100,000 per year discounted at a 10 percent cost of capital forever. The rent is the net
A building will have a net rent of $100,000 per year discounted at a 10 percent cost of capital forever. The rent is the net of repair and maintenance costs and taxes. Suppose the building is currently uninhabitable. It will take one year and $250,000 of work (spent at the end of year 1) to bring it into rentable condition. After that, it will be able to generate rents from the end of year 2. How much would you be willing to pay for the building today
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