Question
You can buy a property today for $3.6 million and sell it in 5 years for $4.6 million. (You earn no rental income on the
You can buy a property today for $3.6 million and sell it in 5 years for $4.6 million. (You earn no rental income on the property.)
a. If the interest rate is 9%, what is the present value of the sales price? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.
b. Is the property investment attractive to you?
c-1. What is the present value of the future cash flows if you also could earn $260,000 per-year rent on the property? The rent is paid at the end of each year. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.
c-2. Is the property investment attractive to you now?
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