You can buy a property today for $3 million and sell it in 5 years for $4 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? Note: 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 $200,000 per-year rent on the property? The rent is paid at the end of each year. Note: 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?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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You can buy a property today for $3 million and sell it in 5 years for $4 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?

Note: 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 $200,000 per-year rent on the property? The rent is paid at the end of each year.

Note: 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?

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