Suppose a certain property is expected to produce net operating cash flows annually as follows, at...

 

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Suppose a certain property is expected to produce net operating cash flows annually as follows, at the end of each of the next 5 years: $35,000, $37,000, $45,000, $46,000, and $40,000. In addition, at the end of the 5th year, we will assume the property will be (or could) be sold for $450,000. What is the NPV of a deal in which you would pay $400,000 for the property today assuming the required expected return or discount rate is 12% per year? Suppose a certain property is expected to produce net operating cash flows annually as follows, at the end of each of the next 5 years: $35,000, $37,000, $45,000, $46,000, and $40,000. In addition, at the end of the 5th year, we will assume the property will be (or could) be sold for $450,000. What is the NPV of a deal in which you would pay $400,000 for the property today assuming the required expected return or discount rate is 12% per year?

Answer rating: 100% (QA)

To calculate the Net Present Value NPV of the deal we need to discount the f... View the full answer