Question
If I am considering investing in a project that is expected to have the following cash flows in years 1-6. Year Cash_Flow 1 2600 2
If I am considering investing in a project that is expected to have the following cash flows in years 1-6.
Year Cash_Flow
1 2600
2 4800
3 3500
4 1700
5 3000
6 13000
I have all of my money tied up in a property portfolio which has substantial transaction costs involved in selling quickly. The cost of the investment opportunity is R14 116.14 and the expected return on the property portfolio is 19.3%. Assuming that the property portfolio and the project have identical risk, what is the maximum amount of transaction costs you would be willing to incur in selling part of your property portfolio to invest in this project?
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