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How much would you be willing to pay

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Reference no: EM133005153

You are considering the purchase of a small retail shopping complex that will generate net cash flows each of the next 15 years, starting at $500,000 in Year 1. You normally demand a 8% rate of return on such investments. Future cash flows after year 1 are expected to grow with inflation at 2% per year. How much would you be willing to pay for the complex today if it will have to be torn down in 15 years, and there is no salvage value?

Reference no: EM133005153

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