You can buy property today for $3 million and sell it in 5 years for $4 million.
Question:
You can buy property today for $3 million and sell it in 5 years for $4 million. (You earn no rental income on the property.)
a. If the interest rate is 8%, what is the present value of the sales price?
b. Is the property investment attractive to you?
c. Would your answer to (b) change if you also could earn $200,000 per-year rent on the property? The rent is paid at the end of each year.
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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