How much would you be willing to pay for the building today

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Question - A company is professionally appraised at $1million. This estimates value is based on forecasted net rent of $100,000 per year discounted at 10% hurdle rate [PV=100,00/0.1= 1,000,000]. The rent is the net of repair and maintenance costs and taxes. Suppose the building is currently uninhabitable. It will take one year and $250,000 of work (spent at the end of the year) to bring it into rentable condition. How much would you be willing to pay for the building today?

Reference no: EM132811094

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