Question

you would like to develop an office building . you analysts forecast that it will cost...

you would like to develop an office building . you analysts forecast that it will cost you 1000000 immediately and it will cost you 500000 in one year. they forecast you can sell the building for 2,400,00 in two years. if your discount rate is i=5%, what is the net present value of this investment?

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Answer #1

Based on the given data, the initial cost is 1000000 and subsequent additional cost is 500000 during Year 1; Further the building can be sold for a value of 240000 at the end of Year 2; Considering the discount rate of 5%, the Net present value of this investment is - 1258503.40

Answer: Net Present Value of this investment is - 1258503.40

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