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The Purchase Price of an Income Producing Property Today Is

Question 2

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The purchase price of an income producing property today is $570,000. After analysis of the expected future cash flows, expected sales price, and expected yield, the investor determines that the future cash flows have a present value (PV) of $580,000. Taking into consideration the price of the property today, what is the net present value (NPV) of this investment opportunity, and should the investor take the deal?
A) $10,000; Yes
B) $10,000; No
C) -$10,000; Yes
D) -$10,000; No

The purchase price of an income producing property today is $570,000. After analysis of the expected future cash flows, expected sales price, and expected yield, the investor determines that the future cash flows have a present value (PV) of $580,000. Taking into consideration the price of the property today, what is the net present value (NPV) of this investment opportunity, and should the investor take the deal?


A) $10,000; Yes
B) $10,000; No
C) -$10,000; Yes
D) -$10,000; No

Correct Answer:

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