Question
I have the opportunity to buy an apartment complex. The apartment complex has a useful life of only 3 years. The owner of the apartment
I have the opportunity to buy an apartment complex. The apartment complex has a useful life of only 3 years.
The owner of the apartment complex will sell it to me for $70,000.
If I buy the apartment complex, I can collect rent payments (cash inflows) of $30,000 per year (assume at the end of each year) for the next 3 years.
Other than the $70,000 purchase price, there will be No Other Cash Outflows during the 3 year period.
But, other than the rent payments, there will be No Other Cash Inflows during this 3 year period.
Assume that investments of like risk are paying 15%.
What should I do?
Should I buy it or Not buy it?
PLEASE SHOW ALL WORK WITHOUT USING EXCEL OR DRAWING CHART. NEED TO LEARN THIS WITH FORMULA
NOTE: I've seen this problem posted before answered used excel / chart style answer which taught me nothing
Cheer's
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