you are the owner of an apartment building that is being offered for sale for $1,500,000. You receive an offer who wants to pay you $500,000 now, $500,000 in six months and $500,000 in one year a. What is the present value of this offer considering you can earn 12% interest compounded monthly on your money? b. If another buyer offers to pay you cash $1,425,000 now which is better deal? c. Calculate total purchase price if you accept the three payment offer in item a. d. now calculate the present value of the payment deal to verify you will receive the original asking price of $1,500,000 for your apartment building

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
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Business Decision:

you are the owner of an apartment building that is being offered for sale for $1,500,000. You receive an offer who wants to pay you $500,000 now, $500,000 in six months and $500,000 in one year

a. What is the present value of this offer considering you can earn 12% interest compounded monthly on your money?

b. If another buyer offers to pay you cash $1,425,000 now which is better deal?

c. Calculate total purchase price if you accept the three payment offer in item a.

d. now calculate the present value of the payment deal to verify you will receive the original asking price of $1,500,000 for your apartment building

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