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You are considering purchasing a property. You are trying to figure out what you should pay for it. You estimate the property will have: Rent:

You are considering purchasing a property. You are trying to figure out what you should pay for it. You estimate the property will have: Rent: $75,000 paid today; each year rent will grow by 7%. Sales of building at the end of 12 years (no fees or taxes): $4 million. Your required cost of capital is 10%. Should you pay $3 million for this property? What is its NPV if you do?

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