Suppose That an Income Producing Property Is Expected to Yield

question 21

Multiple Choice

Suppose that an income producing property is expected to yield cash flows for the owner of $150,000 in each of the next five years, with cash flows being received at the end of each period. If the opportunity cost of investment is 8% annually and the property can be sold for $1,250,000 at the end of the fifth year, determine the value of the property today.

• A) $304,704.00
• B) $1,449,635.50
• C) $1,481,143.98
• D) $2,000,000.00

---

Definitions:

Shipbuilding Industry

A sector of the economy that designs, constructs, and repairs ships, crucial for transportation, military, and trade purposes.

Task System

A labor system used on plantations, particularly in the cultivation of rice and cotton, where enslaved people were assigned specific tasks to complete each day, as opposed to working from sunrise to sunset.

Slave

A person who is the legal property of another and is forced to obey them.

Quota

A fixed share or allocation of something, often applied to trade limitations, immigration controls, or production targets.