# Meston Place is an office building that has recently been put up for sale. It is rented by one tenant

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## Question:

(a) Calculate the payback of the investment and comment on your results. (5 marks)

(b) Calculate the NPV of the investment and comment on your results. (5 marks)

(c) Calculate the IRR of the investment and comment on your results. (5 marks)

(d) Your client, Mr. Yeboah, has approached you that he wants to purchase Meston Place and anticipates that he can use 5 years to recoup his investment. Prior to approaching you, Mr Yeboah had already paid ¢200,000 to another real estate agent as consultancy fee. Based on your calculations in a), b) and c), do you recommend that he buys the property? (5 marks)

(e) What name is given to the ¢200,000 already paid by Yeboah and how is it treated in analysing cash flows?

**Related Book For**

## Valuation The Art and Science of Corporate Investment Decisions

ISBN: 978-0133479522

3rd edition

Authors: Sheridan Titman, John D. Martin

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