You are looking at investing in a real estate property that youexpect might be worth...

You are looking at investing in a real estate property that you expect might be worth $1,063,009 in 6 years. Based on the risk of the property, you require a return of 11.46%. What is the most you should be willing to pay for it today?

Expert Solution

Information provided:

Future value= $1,063,009

Yield to maturity= 11.46%

Time= 6 years

Enter the below in a financial calculator to compute the present value:

FV= 1,063,009

I/Y= 11.46

N= 6

The question is solved by computing the present value.

Press the CPT key and PV to compute the present value.

The value obtained is 554,399.35.

Therefore, I will be willing to pay $554,399.35 today.

jeff jeffy answered 2 years ago

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