Question: A real estate developer plans to construct and then rent a 15-unit office building. The construction costs are $600,000, and cash flows on all units

A real estate developer plans to construct and then rent a 15-unit office building. The construction costs are $600,000, and cash flows on all units will be $100,000 annually for 5 years, at which time the project will end, and the developer will be able to sell the building for $450,000. Calculate the profitability index for the office building using a required rate of return of 12%.

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