You are considering purchasing a Class B office building that is on the market for $13,000
You are considering purchasing a Class B office building that is on the market for $13,000,000. The investment summary information provided by your real estate broker indicates the Net Operating Income in Year 1 is $1,250,000 and is expected to grow by 2.5% per year. You plan to sell the office building at the end of the third year for $14,000,000. Assume a discount rate of 8.5%.
Given this information, what is the Net Present Value (NPV) of this investment?
'The correct answer is: $1,229,330'
(I would like to know precess how to get the $1,229,330)