Question
A property, if sold today, will provide the equity investor with $125,000 in cash flow after taxes. If the property is held, the annual after-tax
A property, if sold today, will provide the equity investor with $125,000 in cash flow after taxes. If the property is held, the annual after-tax cash flow recieved by the investor will be $12,000 per year for the next 10 years. If held and sold in 10 years, the property is expected to provide $194,000 in after-tax cash flow to the investor. 1. What is the anticipated rate of return on this propery, if held for 10 more years. 2. Should this investor sell of keep this propery, assuming a 9% retunis expected if the procees from the sale of this property are invested into another property? Why?
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