You have the opportunity to purchase, for $650,000, an apartment building with a useful life of 37 years. The current rental income is $70,000 per year. The rental income is expected to remain at this level. Since you want a return of at least 11%, how much should you offer to pay for the apartment building?
You have the opportunity to purchase, for $650,000, an apartment building with a useful life of 37 years. The current rental income is $70,000 per year. The rental income is expected to remain at this level. Since you want a return of at least 11%, how much should you offer to pay for the 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
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You have the opportunity to purchase, for $650,000, an apartment building
with a useful life of 37 years. The current rental income is $70,000 per year.
The rental income is expected to remain at this level. Since you want a return
of at least 11%, how much should you offer to pay for the apartment
building?
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