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Every year, Kyle's investment property generates income depending on the state of the economy. There is a 39% chance of a nonvolatile market, in which
Every year, Kyle's investment property generates income depending on the state of the economy. There is a 39% chance of a nonvolatile market, in which case he receives $11,842. In a volatile market, he receives $6,233. His property will continue to generate income forever, and the appropriate discount rate is 11.2%. What would be a fair price for Kyle's property?
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