Calculating present values of cash flows

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Reference no: EM1327712

You can buy property today for $3.3 million and sell it in 5 years for $4.3 million. (You earn no rental income on the property.)

A. If the interest rate is 8.75%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

Present value $ _________ million

B. What is the present value of the sales price, if you also could earn $230,000 per year rent on the property? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

Present value $ __________million

Reference no: EM1327712

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