You are considering the purchase of real estate that will provide perpetual income that should average $50,000 per year.
How much will you pay for the property if you believe its market risk is the same as the market portfolio's?
(The T-bill rate is 5%, and the expected market return is 12.5%).© BrainMass Inc. brainmass.com October 10, 2019, 1:52 am ad1c9bdddf
Perpetual Income per year=C=$50000
Property's market risk is same as ...
Solution describes the steps to calculate fair value of a real estate.