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Could somebody fill out the blanks and provide the calculations/explanation, please? Exercise 1 on NPV: If a house costs $600,000 in year 0, and the
Could somebody fill out the blanks and provide the calculations/explanation, please?
Exercise 1 on NPV: If a house costs $600,000 in year 0, and the annual rental income from the house is $48,000. The annual expenses are $18,000. If the house can be sold for $700,000 at the end of the third year, what is the Net Present Value (NPV) for the house now, if you considered 2% (*or 4%) to be a suitable discount rate? Fill in the blanks with $ signs in the table. (answer all numerical figures in one decimal place) Present Value Year End Cash inflow (annual rental income) Cash outflow (initial cost or annual expenses) Cash Net Flow (4% discount rate) 0 600,000 $ $ 1 48,000 18,000 $ $ 2 48,000 18,000 $ $ 3 748,000 18,000 $ $ NPV $Step by Step Solution
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