Real Estate Principles 3rd Edition by David Ling,Wayne Archer

Exercise 18

An income-producing property is priced at $600,000 and is expected to generate the following after-tax cash flows: Year 1: $42,000; Year 2: $44,000; Year 3: $45,000; Year 4: $50,000; and Year 5: $650,000. Would an investor with a required after-tax rate of return of 15 percent be wise to invest at the current price
A) No,the NPV is -$548,867.
B) No,the NPV is -$148,867.
C) Yes, the NPV is $51,133.
D) Yes,the NPV is $451,133.