Question
Questions 31-40 are four (4) points each. Your employer, Rubio LLC, is considering an investment in an office building that has the following cash flows:
Questions 31-40 are four (4) points each. Your employer, Rubio LLC, is considering an investment in an office building that has the following cash flows: Purchase in Year 0 $ -2,250,000 Year 1. 180,000 Year 2.. 226,000 Year 3.. 220,000 Year 4 239,000 Year 5 230,000, and a sale @ $3,090,000 takes place EOY 5 The companys weighted average cost of capital that they use as their discount rate for such calculations is 10%
In the Rubio LLC example above, assume that the company bought the office building using 70% mortgage debt at an interest rate of 4.00% over 240 months.
- What is the leveraged IRR of the project ?
- 32.15%
- 24.58%
- 21.48%
- 15.55%
- Using the companys hurdle rate (discount rate) for leveraged projects of 9.00%, what is the leveraged NPV of the project?
- $ 659,067
- $ 893,210
- $ 591,450
- $ 953,378
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started