Question

Janky Real Estate is selling an apartment property that is owns. The property is expected to generate acash flow of 269,214 every year forever, the first cash flow occurring one year from today. If theannual cash-flow is expected to increase by 1% , how much should Janky value the property today ifapplicable interest rate is 12% ?(Round to 2 decimal places)

Answer 1

269214 + 1/100 ( 269214) + 12/100(269214)

= 269214 + 2692.14 + 32305.68

= 304,211.82