Homework: Chapter 11 Score: 0 of 1 pt Appendix Problem 1A.8 Homework Save n 23 o
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Homework: Chapter 11 Score: 0 of 1 pt Appendix Problem 1A.8 Homework Save n 23 of 24 (20 complete) HW Score: 75%, 18 of 24 pts E Question Help Assume that the building Assume that the present discounted value of an investment project (commercial development) at a dscount rate of 4 percent is just sold for $828 million $ $825,445,000. The buyer will eam a rate of retum your response as an integer.) 4 percent because the buyer could othenwise eam the same fow of profits by depositing S in the bank (Enter Enter your answer in the answer box and then click Check Answer All parts showing Clear All Check Ans This cour50 R20wT 18 21049 TR 1200 Copyright 2018 Pearson Education on Case Far Oster: Prinopies ey s 12eExplanation / Answer
The Buyer will earn a rate of return Less than 4 Percent because the buyer could otherwise earn the same flow of profits by depositing 63,875,000 in the bank The calculation for the above statement is as follows. Present worth 825.445 Sale price 828 Difference or actual profit 2.555 Rate at which profit is earned =2.555/825.445% 0.30953001 % Principal amount need to earn 4% return for matching same flow of profit is =2.555*100/4 63.875
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