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Posted on Sep 19, 2024

You can buy property today for $2.4 million and sell it in 5 years for $3.4 million. (You earn no rental income on the property.)

If the interest rate is 8%, what is the present value of the sales price?

c-1.

What is the present value of the future cash flows, if you also could earn $140,000 per year rent on the property? The rent is paid at the end of each year

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