You have the opportunity to purchase an office building. You have a tenant that will generate $16,000 in cash flow per year for three years. You anticipate selling the building for $450,000 at the end of three years. How much are you willing to pay for the building?

Assume that capital has an opportunity cost of 7%

If the building was offered for sale at $350,000, would you buy it and what is the added value of purchasing and managing the building?