Ramlu Investment Group (RIG) is considering selling an apartment property that it owns. A buyer is...
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Ramlu Investment Group (RIG) is considering selling an apartment property that it owns. A buyer is willing to pay $2,000,000 for the property, all of which would be paid to RIG upfront (today). Determine what RIG should do under the following scenarios. (5.1). RIG expects the property to generate a cash inflow of $150,000 every year, forever, with the first cash flow occurring one year from today. The discount rate is 12%. (3 Marks) (5.2). RIG expects the property to generate a cash inflow of $150,000 one year from today, and this amount will grow by approximately 3% every year thereafter, forever. The discount rate is 12%. Ramlu Investment Group (RIG) is considering selling an apartment property that it owns. A buyer is willing to pay $2,000,000 for the property, all of which would be paid to RIG upfront (today). Determine what RIG should do under the following scenarios. (5.1). RIG expects the property to generate a cash inflow of $150,000 every year, forever, with the first cash flow occurring one year from today. The discount rate is 12%. (3 Marks) (5.2). RIG expects the property to generate a cash inflow of $150,000 one year from today, and this amount will grow by approximately 3% every year thereafter, forever. The discount rate is 12%.
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51 To determine what RIG should do in this scenario we need to calculate the present value of the ex... View the full answer
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date:
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