Assume you will get 40 rental payments paid over 40 years at the beginning of each year. Initially the rent equals R=$40; but it will grow at a rate of g=1% per year. The NPV of this income stream equals $162.87. What is your discount rate? Provide your answer as a percentage with two decimals, e.g., 1.23% (or 0.0123). Show your work.
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We know the initial rent (R), the growth rate of the rent (g), the number of payments (N), and the NPV. We need to find the discount rate (r). Show more…
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