Ashley projects that she can get $100,000 cash per year for 5 years on a real estate investment project.If Ashley wants to earn a rate of return of 12%,what is the maximum that she should pay for the investment? (Round your answer to the nearest dollar. )

Question

Quizplus · Accepted Answer

Net present value = Expected cash flow x PV factor
Net present value = $100,000 x 3.604776 = $360,478 (rounded)
PV factor from Appendix Table 2;n = 5 and i = 12

Ashley Projects That She Can Get $100,000 Cash Per Year