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Mr. Richards owns a property that, if sold today, will provide him with $1,280,000 in cash flow after taxes. If the property is held, the

Mr. Richards owns a property that, if sold today, will provide him with $1,280,000 in cash flow after taxes. If the property is held, the annual after-tax cash flow received will be as follows: $105,000 for years 1 to 5 and $120,000 for years 6 to 10. If held and sold in 10 years, the property is expected to provide $1,600,000 in after-tax cash flow. Also, Mr. Richards can receive a 9.40% rate of return by investing the sales proceeds today in a different project. Should he keep the property OR sell and invest in the second property.
a.
Cant tell without knowing the cash flow from the second property
b.
Do not sell the property: IRR 10.20% > 9.40%
c.
Do not sell the property: IRR 10.63% > 9.40%
d.
Sell the property: IRR of 10.42% > 9.40%; and invest proceeds in the second property

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