Question

Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is

16 %

The following table summarizes the initial cost and the sale price in three years for each​ property:

	Cost Today		Sale Price in Year 3
Parkside Acres	$530,000		$1,030,000
Real Property Estates	890,000		1,490,000
Lost Lake Properties	520,000		920,000
Overlook	30,000		230,000

Kartman has a total capital budget of

$560,000

to invest in properties. Which properties should it​ choose?

Answer 1