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QUESTION
Consider a property that is expected to produce a constant net income of $150,000 per annum in perpetuity.
25. Consider a property that is expected to produce a constant net income of
$150,000 per annum in perpetuity. An investor who is considering purchasing the property plans to hold it for 10 years. The investor expects the property to appreciate by 100% (double in value) over this period. The discount rate is 15%. What is the maximum price an investor should be willing to pay for the property?
