What is the price of a house which monthly rent is 2000 and annual discount rate...
What is the price of a house which monthly rent is 2000 and annual discount rate is 10%. The monthly rate is estimated to increase at % 5% per year
Homework Answers
| As per discounted cash flow, price of house is present value of future cash flow. | ||||||||
| Price of house | = | C/(Ke-g) | Where, | |||||
| = | $ 4,80,000.00 | C | = | $ 2,000.00 | ||||
| Ke | = | 10%/12 | = | 0.008333 | ||||
| g | = | 5%/12 | = | 0.004167 | ||||
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