A development company would like to purchase a group of condominiums with an annual cash flow of $17,500.  They expect to own them for 5 years, and the estimated selling price at that time is $540,000.  Calculate the maximum amount the company can pay for the condos in order to realize a 12% annual return or yield.

Principles of Accounting Volume 2
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ISBN:9781947172609
Author:OpenStax
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Chapter11: Capital Budgeting Decisions
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A development company would like to purchase a group of condominiums with an annual cash flow of $17,500.  They expect to own them for 5 years, and the estimated selling price at that time is $540,000.  Calculate the maximum amount the company can pay for the condos in order to realize a 12% annual return or yield.

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