Sairah purchased an investment property for $450,000, 2 years ago. The after-tax cashflow of the...
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Sairah purchased an investment property for $450,000, 2 years ago. The after-tax cashflow of the property has been $45,000 per year to date, but market conditions have improved and Sairah expects the cashflow to improve to $88,000 per year for the next 20 years (assume these are year end cashflows and the property will be worthless thereafter). The annual cost of capital (or cap rate) for this area is 8%. What is the value of the property today?
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