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You are considering buying a vacation home in Barbados. The property costs 1 million Barbados dollars (B$). You will use the property for 10 years,
You are considering buying a vacation home in Barbados. The property costs 1 million Barbados dollars (B$). You will use the property for 10 years, at which time it is expected to have appreciated by 50%. The current spot rate, S(B$/$), is 1.78. Any gains are subject to a 30% tax. Interest rates are 4% in Canada and 2% in Barbados. Reasonable discount rates are 5% for Canadian investors and 8% for Barbados investors. Should you buy this home?
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