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You own an office building that will earn fixed rent of $6.5 million for each of the next ten years. Rent is paid at the
You own an office building that will earn fixed rent of $6.5 million for each of the next ten years. Rent is paid at the end of each year. Your management company has determined a way to save 200 basis points (bps) of revenue in operating expenses over the next ten years by reducing the temperature of the water that is circulated through the domestic water system. How much asset value did the management company create for your investors if your hurdle rate is 12%? Hide hint for Question 2 Think present value of the savings
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