Your landlord is planning to renovate the pool in your apartment. The New pool will cost 152,895 dollars, which will add money to you rent but will increase the revenue for your landlord by 54,500 at year 4 and 87325 at years 10. He calculates that the operational cost will be 13250. The poll has a salvage value of 68,560 after 8 years. a) At a discount rate of 12.45% find the present value of this plan b) draw a cash flow diagram and show if your land lord's plan is viable or not

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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Your landlord is planning to renovate the pool in your apartment. The New pool will cost 152,895 dollars, which will add money to you rent but will increase the revenue for your landlord by 54,500 at year 4 and 87325 at years 10.

He calculates that the operational cost will be 13250. The poll has a salvage value of 68,560 after 8 years.

a) At a discount rate of 12.45% find the present value of this plan

b) draw a cash flow diagram and show if your land lord's plan is viable or not

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