Based on the NOIs from Year 1 to 8, the value of the property today to Zenith Investment Company will be $13,221,383.94.
<h3>What is the value of the investment today?</h3>
Because the investment will be sold in 7 years, we need to find the terminal value from year 8 and above considering the indefinite growth rate of 3%.
Terminal value:
= Year 8 cashflow / (Return rate - Growth rate)
= 1,459,170 / (12% - 3%)
= $16,213,000
This amount should be added to the Year 7 cashflow to get:
= 16,213,000 + 1,419,000
= $17,632,000
The value today can be found by taking all the cashflows to their present value and summing them:
= 1,240,000/ 1.12 + 1,240,000 / 1.12² + 1,240,000 / 1.12³ + 1,280,000 / 1.12⁴ + 1,330,000 / 1.12⁵ + 1,380,000/ 1.12⁶ + 17,632,000⁷
= $13,221,383.94
Find out more on present value at brainly.com/question/17199492.
