A real estate developer plans to construct and then rent a 15-unit office building. The...
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Accounting
A real estate developer plans to construct and then rent a 15-unit office building. The construction costs will be incurred immediately and are expected to be $625. The annual cash flow on all units is expected to be $150 starting in one year and continuing for a total of 3 consecutive years. Calculate the profitability index for the office building using a required rate of return of 7.350%. Your answer should be in the form of a number and should not include a percentage sign. For this calculation it is best to include more than 2 decimal points, such as an answer of 0.935 instead of 0.93 or 0.94.
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