Questions $31-40$ are four $(4)$ points each. Your employer, Kent, LLC$,$ is considering an investment in an office building that has the following cash flows:

Purchase in Year $0...............$ $ $-2,500,000$

Year $1...................180,000$

Year $2....................276,000$

Year $3....................220,000$

Year $4.....................239,000$

Year $5.....................250,000,$ and a sale @ $$3,190,000$ takes place EOY $5$

The company$$s weighted average cost of capital that they use as their discount rate for such calculations is $10\%$

$31.$ What is the project$$s IRR?

a$.13\mathrm{.}43\%$

b$.10\mathrm{.}38\%$

c$.10\mathrm{.}96\%$

d$.16\mathrm{.}12\%$

$32.$ For Rubio LLC what is the NPV$?$

a$.$ $$344,814$

b$.$ $$-168,158$

c$.$ $$356,234$

d$.$ $$490,401$

$33.$ In the above problem, you might expect

a$.$ The Yield to be higher than the discount rate because you sold the property at a profit.

b$.$ The NPV to be positive because the IRR is higher than the discount rate

c$.$ The NPV to be negative because the IRR is lower than the discount rate

d$.$ All of the above

$34.$ The Dow Jones Industrial Average is made up of

a$.10$ companies

b$.$ The largest $1,000$ companies in the world

c$.30$ blue chip companies, not all of which are heavy industrial companies

d$.100$ companies with large cap market value

In the Rubio LLC example above, assume that the company bought the office building using $70\%$ mortgage debt at an interest rate of $4\mathrm{.}00\%$ over $240$ months.

$35.$ What would be the monthly debt service on the office building?

a$.$ $$11,669$

b$.$ $$9,544$

c$.$ $$6,890$

d$.$ $$10,604\mathrm{.}66$

$36.$ What would be the net cash flows after debt service in year $3?$

a$.$ $$92,744$

b$.$ $$79,972$

c$.$ $$100,018$

d$.$ $$2,980,000$

$37.$ What would be the balance of the loan at the end of Year $5?$

a$.$ $$1,240,000$

b$.$ $$1,433,666$

c$.$ $$1,290,300$

d$.$ $$1,576,776$

$38.$ What would be the total cash flows in Year $5,$ taking into consideration the cash flows, annual debt service, sale price and the balance on the loan at the EOY $5?$

a$.$ $$1,662,985$

b$.$ $$1,937,607$

c$.$ $$1,723,196$

d$.$ $$1,879,078$

$39.$ What is the net cash flow in year $2$ after paying debt service $?$

a$.$ $$276,000$

b$.$ $$199,877$

c$.$ $$148,744$

d$.$ No way of telling

$40.$ What is the net cash flow in year $4$ after paying debt service?

a$.$ $ $577,943$

b$.$ $ $111,744$

c$.$ $ $591,450$

d$.$ $ $95,766$