Question
Ray has been offered a 6-year assignment in Portugal. Hence, he will rent out his four-bedroom house to an old friend. Rental income will be
Ray has been offered a 6-year assignment in Portugal. Hence, he will rent out his four-bedroom house to an old friend. Rental income will be 13,794 dollars per year but maintenance/repair costs will be 2,518 dollars in the first year and thereafter increase by 877 dollars per year. The tenant will be doing the maintenance/repair operations and therefore, at the end of each year, deposits the annual rent amount net of maintenance costs. Find the PRESENT value of Rays future cash flows given that the proxy interest rate is 5% per year (annual compounding). (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas)
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