Growth Rate 4% Required Return 11% Year 1 Rent 20,000 Years Stable Rent 3 Years Growing...

Growth Rate 4%

Required Return 11%

Year 1 Rent 20,000

Years Stable Rent 3

Years Growing Rent 7

Year Sold 10

Sale Price in 10 Years 325,000

Ask Price Today 200,000cash flows

Present Value

PV First 3 Years
PV Next 7 Years
PV Sale price
Total PV

Determine cash flows period 0-10

Expert Solution

Year	Ask price	Rent	Sale price	Net CF
0	-200000			-200000.00
1		20000		20000.00
2		20000		20000.00
3		20000		20000.00
4		20800		20800.00
5		21632		21632.00
6		22497.28		22497.28
7		23397.17		23397.17
8		24333.06		24333.06
9		25306.38		25306.38
10		26318.64	325000	351318.64

PV First 3 Years	$48,874.29
PV Next 7 Years	79557.22
PV Sale price	$114,459.96
Total PV	$242,891.47

Workings

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