In 3 or 4 sentences: How do you determine what your rate of return should be when you invest in a property?
The required rate of return is determined by several factors:
1. What is the inflation rate? If the inlfation rate is high the value of dollar tomorrow is lower than the value of dollar today. So, the required rate of return should take into consideration the rate of inlfation during the investment period.
2. What is the liquidity ...
The solution explains five factors which can be used to determine an expected rate of return on an investment.