Sylvia has received a $500,000 inheritance from her favorite, recently deceased aunt in Hawaii. Sylvia is planning to purchase a condo in Hawaii in the same area where her aunt lived all her life and to rent it to vacationers. She hopes to make 8% per year on this purchase over an ownership period of 20 years. The condo's total first cost is $500,000, and she conservatively expects to sell it for 90% of the purchase price. No annual M&O costs are considered in the analysis.

(a) What is the capital recovery amount?

(b) If there is a real boom in rental real estate 10 years in the future, what sales price (as a percentage of original purchase price) is necessary at that time (year 10) to realize the same amount as the 8% return expected over the 20-year ownership period?