Use the following information to evaluate this investment
assuming below-line treatment of capital expenditures: property: 5
office units, contract rents per unit: $2,500 per month; vacancy
and collection losses: 14%; operating expenses: $42,000; capital
expenditures: 5%. After 5 years this property will be sold for
$750,000. The cost of capital is 11%, and the capitalization rate
is 9%. The property is currently valued at $1,000,000. Use all the
methods from this class to decide whether to purchase this
property.