Present Value [2916]

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Larry is buying a duplex that rents for $6,000 per side per year.  If he can sell the property at the end of 10 years for $100,000, what is the most he should pay for it?  Assume he can invest his money elsewhere for 8% and wants at least that return from the duplex.

 

Column

Rate

Period

Amount

Factor

Value

4

8.0%

10

$100,000

0.463193

$46,319

5

8.0%

10

$12,000

6.710081

$80,521

 

 

 

 

 

$126,840


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