For a period of three (3) years, a building can be leased for $125,000 per year...

For a period of three (3) years, a building can be leased for $125,000 per year with an explicit maintenance cost of $40,000 and an implicit maintenance cost of $32,500 per year. Assume that all revenues are received and costs borne at the end of each year and the interest rate is 4.5% per year. Over the period of three (3) years, determine the present value of the stream of (a) accounting and (b) economic profits on the building. Clearly show your steps and manual calculations (by hand and calculator).

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jeff jeffy answered 1 year ago

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