A property investor receives rental payments of $1900 at the start of each month for five years.If the required rate of return is 7.2% per annum,compounded monthly,what is the value of the property investment today?
A) $83 067.50
B) $90 092.50
C) $95 498.05
D) $96 071.04

Question

Quizplus · Accepted Answer

The value of the property investment today can be calculated using the present value formula for an annuity: PV = PMT x ((1 - (1+r)^(-n))/r), where PV is the present value, PMT is the periodic payment, r is the required rate of return, and n is the total number of periods. Plugging in the values, we get PV = $1900 x ((1 - (1+0.006)^(-60))/0.006) = $96,071.04, which is closest to option D.

A Property Investor Receives Rental Payments of $1900 at the Start