You can buy property today for $3.3 million and sell it in 5 years for $4.3 million. (You earn no rental income on the property.)
a. If the interest rate is 9%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
Present value $ million
b. Is the property investment attractive to you?
Yes
No
c-1. What is the present value of the future cash flows, if you also could earn $230,000 per year rent on the property? The rent is paid at the end of each year. (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
Present value $ million
c-2. Is the property investment attractive to you now?
Yes
No