Question
Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual
Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 14%. The following table summarizes the initial cost and the sale price in three years for each property:
| Cost Today | Sale Price in Year 3 | |||
| Parkside Acres | $520,000 | $1,020,000 | ||
| Real Property Estates | 990,000 | 1,590,000 | ||
| Lost Lake Properties | 510,000 | 910,000 | ||
| Overlook | 20,000 | 220,000 | ||
Kartman has a total capital budget of $540,000 to invest in properties. Which properties should it choose?
The profitability index for Parkside Acres is ? (Round to two decimal places)
The profitability index for real estates is? (Round to two decimal places)
The profitability for Lost Lake Properties is ? (Round to two decimal places)
The profitability index for overlook is ? (Round to two decimal places)
Which properties should Katman Corporation choose?
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Trade Union Finance
Authors: Marick F. Masters, Raymond Gibney
1st Edition
1032371382, 978-1032371382
