Valuation fundamentalsPersonal Finance ProblemImagine that you are trying to evaluate the economics of purchasing a condominium to live in during college rather than renting an apartment. If you buy the condo, during each of the next 4years you will have to pay property taxes and maintenance expenditures of about $6,000 per year, but you will avoid paying rent of $10,000 per year. When you graduate 4 years from now, you expect to sell the condo for$126,000. If you buy the condo, you will use money you have saved and invested earning a 4% annual return. Assume that all cash flows (rent, maintenance, etc.) would occur at the end of each year. A.) Identify the cash flows, their timing, and the required return applicable to valuing the condo... The amount of property taxes and maintenance expenditures, CF, associated with the purchase of the condo is $___ The amount saved on rent is $___

The amount, FV, for which you assume you can sell the condo at the end of the ownership period is $___ The number of years, n, you intend to own the condo is ___ years The minimum after-tax required rate of return, r, you need in order to justify removing funds from your savings account is ___% B. The maximum price you would be willing to pay to acquire the condo is $___