B Invest Finance is considering the purchase of a commercial building at a cost of 1.4 billion. The property would be rented immediately to tenants at annual rent of 160 million, payable in arrears in perpetuity.
What would be the NPV of the investment, assuming the company has cost of capital of 10%
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Perpertuity
12y ago#1Not an F1 topic, but the answer is:
-1,400 + 160/0.1 = 200m
(The PV of a perpetuity paid/received form time one onwards is = Annual flow/discount rate)
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