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21) 10 POINTS. You borrow $3 million from a Bank to purchase a $4 million office building. Your brother in law just cashed out some
21) 10 POINTS. You borrow $3 million from a Bank to purchase a $4 million office building. Your brother in law just cashed out some of the Bitcoins that he purchased in 2010 and has agreed to invest the $1 million of equity that you need so long as he receives: (1) A Cumulative Preferred Return of 8% per year calculated on a non-compounded basis, plus, (2) 60% of the cash distributions in excess of the Preferred Return. The First Year's Net Cash Flow for Distribution (after payment of Debt Service but before any Preferred Return Distribution) is $75,000. The Second Year's Net Cash Flow for Distribution (after payment of Debt Service but before any Preferred Return Distribution) is $100,000. How much of the Net Cash Flow is distributed to You in each of the first two years of the investment? YEAR 2= YEAR 1 =
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