You can buy property today for $3.5 million and sell it in 6 years for $4.5 million. (You earn no rental income on your property.)
If the interest rate is 9%, what is the present value of the sales price?
Is the property investment attractive to you?
Would your answer to (b) change if you also could earn $200,000 per-year rent
on the property? The rent is paid at the end of each year.
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