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What is the present value of the future cash flows

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Reference no: EM133030238

Question - You can buy property today for $3.9 million and sell it in 5 years for $4.9 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-1. What is the present value of the future cash flows, if you also could earn $290,000 per year rent on the property? The rent is paid at the end of each year.

c-2. Is the property investment attractive to you now?

Reference no: EM133030238

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