Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 16%. The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Three Years Parkside Acres $860,000 Real Property Estates 1,380,000 Lost Lake Properties 980,000 Overlook 360,000 Kartman has a total capital budget of $800,000 to invest in properties. Which properties should it choose? Cost Today $460,000 800,000 620,000 140,000 The profitability index for Parkside Acres is (Round to two decimal places.)
Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 16%. The following table summarizes the initial cost and the sale price in three years for each property: Sale Price in Three Years Parkside Acres $860,000 Real Property Estates 1,380,000 Lost Lake Properties 980,000 Overlook 360,000 Kartman has a total capital budget of $800,000 to invest in properties. Which properties should it choose? Cost Today $460,000 800,000 620,000 140,000 The profitability index for Parkside Acres is (Round to two decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these
investments is 16%. The following table summarizes the initial cost and the sale price in three years for each property:
Cost Today
$460,000
800,000
Sale Price in Three Years.
$860,000
1,380,000
980,000
360,000
Kartman has a total capital budget of $800,000 to invest in properties. Which properties should it choose?
Parkside Acres
Real Property Estates
Lost Lake Properties
Overlook
620,000
140,000
The profitability index for Parkside Acres is. (Round to two decimal places.)
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