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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

16%.

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

$590,000

$1,090,000

Real Property Estates

880,000

1,480,000

Lost Lake Properties

580,000

980,000

Overlook

90,000

290,000

Kartman has a total capital budget of

$680,000

to invest in properties. Which properties should it choose?

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