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A company has the option to purchase a building for $500,000 at the begining of year one. This building is larger than needed; however, the
A company has the option to purchase a building for $500,000 at the begining of year one. This building is larger than needed; however, the excess space can be sublet for 12 years at a net annual rental of $8,000. Rental payments will be received at the end of each year and the risk associated with this investment is 10%. Calculate the present value of the investment in the building.
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