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Find how much would be willing to pay for building today

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Problem 1: GWLT is professionally appraised at $1 million. This estimates value is based on forecasted net rent of $100,000 per year discounted at a 10% hurdle rate [PV = 100,000/ 0.1 = 1,000,000]. The rent is the net of repair and maintenance costs and taxes. Suppose the building is currently uninhabitable. It will take one year and $250,000 of work (spent at the end of the year) to bring it into rentable condition. How much would you be willing to pay for the building today?

A. None of the answers is correct

B. $681,818

C. $909,090

D. $750,000

E. $1,000,000

Reference no: EM132828451

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