https://besttutorshelp.com/wp-content/uploads/2021/06/logoBTH-300x60.png 0 0 admin https://besttutorshelp.com/wp-content/uploads/2021/06/logoBTH-300x60.png admin2022-10-28 07:58:042022-10-28 07:58:04solution
A property company has just purchased a retail outlet for Ã¢âÂ¬4m. A further Ã¢âÂ¬1m will be needed to upgrade the property in six months’ time. A tenant will occupy the property 12 months after the purchase date and will pay rent to the company for five years and then purchase the property for Ã¢âÂ¬6m. The rent will be paid annually in advance and will be Ã¢âÂ¬0.4m for the first year and will thereafter increase at a fixed compound rate at the start of each subsequent year. Calculate the fixed compound rate of increase of the rental income if the property company makes an annual internal rate of return of 12% p.a. on the overall transaction. (You make use of Excel’s What- If-Analysis tool to help solve the final equation in this question however you must show all your workings and reasoning to establish the equation on your A4 hand-written script. If you do not then the mark for the question will be 0).