Ben is property investor, Ben is a property investor. He is

Ben is property investor

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Reference no: EM131948553

Ben is a property investor. He is choosing between the two properties (assume he will pay cash, but can only afford one of them).

Property A costs $1.2 million. Rent is $36,000 per annum (for simplicity, assume that all rent is paid at the end of the year). He will hold this property for three years, and sell it for $1.4 million.

Property B costs $1.4 million. Rent is $40,000 per annum, and after 3 years it will be sold for $1.62 million.

Assuming a discount rate of 5%, which property should Ben purchase?

Reference no: EM131948553

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