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Jose is thinking of purchasing a small real estate project. The listing price (asking price) is $200,000. Joses best estimate of the after-tax cash flows
Jose is thinking of purchasing a small real estate project. The listing price (asking price) is $200,000. Joses best estimate of the after-tax cash flows is $30,000 in years 1-5 and $36,000 in years 6-10. Also, he plans to sell the property at the end of 10 years for $300,000 after tax. If Jose requires a 16 rate of return on his real estate investments, what is this project worth (present value) to him in todays dollars? Should Jose purchase, does he make or lose money if he purchases? Do not use excel.
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