A Property Owner Has Set Up a Contract in Which

question 19

Multiple Choice

A property owner has set up a contract in which he agrees to sell a warehouse 5 years from now to the tenant who currently leases the space. The tenant has agreed to continue to pay $20,000 in rent at the end of each year, including year five, at which time he will purchase the building for an additional $1,500,000. Assuming the required rate of return on a similar investment is 10% (annual) , how much is this deal presently worth to the original owner of the property?

• A) $1,007,197.20
• B) $1,014,779.29
• C) $2,281,452.80
• D) $2,293,663.00

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Definitions:

Product Mix

The total range of products a company offers to its customers to buy.

University

An institution of higher education and research which awards academic degrees in various disciplines.

Augmented Product

An enhanced version of a product that includes additional features or services that go beyond the basic functionality to provide extra value to the consumer.

Associated Services

Additional services related to a product or core service that enhance its value or user experience.