Homework answers / question archive / You can buy property today for $2

You can buy property today for $2

Finance

Share With

You can buy property today for $2.6 million and sell it in 6 years for $3.6 million. (You earn no rental income on the property.)

a. If the interest rate is 6%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

b. Is the property investment attractive to you?

c-1. What is the present value of the future cash flows, if you also could earn $160,000 per year rent on the property? The rent is paid at the end of each year. (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)c-2. Is the property investment attractive to you now?