Question: You can buy property today for $2.4 million and sell it in 5 years for $3.4 million. (You earn no rental income on the property.)
a. If the interest rate is 8%, what is the present value of the sales price?
b. What is the present value of the future cash flows, if you also could earn $140,000 per year rent on the property? The rent is paid at the end of each year