Result:
The amount he should pay equals = $270,000
Explanation:
The sum due for the investment represents the present value of net income, discounted at a 12% return rate.
The occupancy percentage = 100 - 5= 95%
The net income equals occupancy rate × total income - expenses
= 95%× 3,600× 12 - 8,640= 32400
<passuming this="" income="" continues="" indefinitely="" the="" present="" value="" of="" is="" calculated="" as="">
PV of net income = A/r
A = 32400, r = 12%
= 32400/0.12
=$270000
The amount he should pay equals = $270,000
</passuming>
The intrinsic value of Stock C is $300. The expected dividend to be paid is $3, with a dividend growth rate of 9%. Stock C requires a return of 10%, while Stock D requires a return of 13%. We determine the intrinsic value using the DDM method. The intrinsic value formula is Upcoming Dividend ÷ (Required rate of return - Growth rate). In this case, it calculates to 300, indicating the intrinsic value of Stock C.
