Price Corporation Is Considering Purchasing Rental Property That Provides Annual

Price corporation is considering purchasing rental property that provides annual cash flows of $600,000. Rent is expected to increase by 2.5% annually for the foreseeable future. If Mason's return requirement is 12.5% and the rental property is listed at $6,500,000 determine if the property is over or under valued from Mason's perspective.

A) Listed property is over-valued by $500,000.
B) Listed property is under-valued by $500,000.
C) Listed property is over-valued by $292,727.
D) Listed property is under-valued by $292,727.
E) Listed property is priced correctly.