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You are presented with an investment opportunity in a residential building. The current cash flow from the building is $10mil. If you purchase the building
You are presented with an investment opportunity in a residential building. The current cash flow from the building is $10mil. If you purchase the building today, you will receive the first rental income next year. The cash flow from the building is expected to increase 4 percent year-over-year for the next 10 years. The resale value of the property is estimated at $100mil in 10 years. Find the current value of the property given that the market discounts cash flows with similar risk at 12 percent.
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