You have the opportunity to purchase an office building.You have a tenant that will generate $16,000 in
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Question:
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?
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