1. Assume that we have a commercial real estate property whose projected 5-year cash flows are the following:

Year 1: $20

Year 2: $25

Year 3: $30

Year 4: $35

Year 5: $140

Assuming a cap rate of 5% and a discount rate of 2%. What is the propertys current property value under the direct capitalization method?

A $206.13

B $231.04

C $400

D $1000