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present value of the inflows

You are contemplating the purchase of an office building. Next year net rental income will be $400,000, which will grow at 4% per year. You believe that in 10 years the office building could be sold for $7.4 million. The appropriate discount rate for investments of this type is 12%. What is the most you should be willing to pay for the office building today?

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We have to find the present value of the inflows:
You are contemplating the purchase of an office building. Next year net rental income will be $400,000, which will grow at 4% per year.
You believe that in 10 years the office building could be sold for $7.4 million. The appropriate ...

Solution Summary

The present value of the inflows is found.

$2.19