A property,if sold today,will provide the equity investor with $150,000 in cash flow after taxes.If the property is held,the annual after-tax cash flow received by the investor will be as follows: $18,000 for years 1 to 5,$24,000 for years 6 to 10.If held and sold in 10 years,the property is expected to provide $180,000 in after-tax cash flow to the investor.What should the investor do if she can receive a 14% rate of return by investing the sales proceeds today in a different project?
A) Sell the property and invest proceeds in the second property
B) Do not sell the property
C) Renovate the property
D) Can't tell without knowing the cash flow from the second property
Correct Answer:
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