Question
Show me the work please A property could be sold today (year 0) to provide an after-tax cash flow from sale of $900,000. If sold
Show me the work please
A property could be sold today (year 0) to provide an after-tax cash flow from sale of $900,000. If sold next year (year 1), the property is expected to generate after-tax cash flow from operations of $25,000 and provide an after-tax cash flow of $950,000 from the sale at the end of year 1.
b. As an alternative, the owner can forgo the sale and instead improve the property by investing $80,000 in year 0. That will increase the annual after-tax operating cash flows by $10,000 - from $25,000 to $35,000. A sale at the end of year 3 will generate an additional $95,000 in after-tax cash flows. What is the internal rate of return (IRR) on the incremental cash flows?_________
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