Suppose that annual income from a rental property is expected to start at $1,300.00 per year and
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Question:
Suppose that annual income from a rental property is expected to start at $1,300.00 per year and decrease at a uniform amount of $55.00 each year after the first year for the 15-year expected life of the property. The investment cost is $8,100.00, and i is 9% per year.Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one.What is the present value of all positive cash flows? What is the present value of all negative cash flows?What is the present value of the expected income for the entire 15-year expected life of the property? Is this a good investment?
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