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You (an individual investor) are interested in investing in a building costing 52,000, for a...

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Finance

You (an individual investor) are interested in investing in a building costing 52,000, for a period of four years, after which you expect to sell it for 65,000. You expect to earn 5,000 rental income at the end of each of the four years. You can obtain a loan for 30% of the cost of the building at an interest rate of 4% per annum, charged at the end of each year. You require a return of 8% on any equity invested. This required return on equity takes the gearing of the investment into account. Calculate the net present value of this investment, rounded to the nearest pound.

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