Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties...
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Accounting
Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is
10 %10%.
The following table summarizes the initial cost and the sale price in three years for each property:
Cost Today
Sale Price in Year 3
Parkside Acres
$ 590 comma 000$590,000
$ 1 comma 090 comma 000$1,090,000
Real Property Estates
950 comma 000950,000
1 comma 550 comma 0001,550,000
Lost Lake Properties
580 comma 000580,000
980 comma 000980,000
Overlook
90 comma 00090,000
290 comma 000290,000
Kartman has a total capital budget of
$ 680 comma 000$680,000
to invest in properties. Which properties should it choose?
The profitability index for Parkside Acres is
nothing.
(Round to two decimal places.)
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