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1) You have the opportunity to purchase an office building. You have a tenant lined...

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Accounting

1) You have the opportunity to purchase an office building. You have a tenant lined up that will generate $16,000 per year in cash flows for three years. At the end of three years you anticipate selling the building for $450,000. How much would you be willing to pay for the building?

2) If the same building is being offered for sale at a price of $350,000, would you buy the building and what is the added value generated by your purchase and management of the building?

Note: the discount rate is 7%

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