The offering price of an income-producing property today is $1,520,000. After analysis of the expected...
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The offering price of an income-producing property today is $1,520,000. After analysis of the expected future cash flows, expected sales price, using a discount rate of 12%, the investor determines that the future cash flows have a present value (PV) of $1,520,000. Taking into consideration the price of the property today, what is the net present value (NPV) of this investment opportunity, should the investor take the deal, and what would happen if the discount rate were changed to 10%?
A) $10,000; No; it is a worse deal.
B) $0; No; it is a better deal.
C) -$100,000; Yes; it depends.
D) $0; Yes; it becomes a better deal.
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