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

1. (a)What would be the net cash flows after debt service in year 3 ?
   1. $105,470
   2. $110,019
   3. $100,018
   4. $2,980,000

1. (b) In the above problem, you might expect
   1. The Yield to be higher than the discount rate because you sold the property at a profit.
   2. The NPV to be positive because the IRR is higher than the discount rate
   3. The NPV to be negative because the IRR is lower than the discount rate
   4. All of the above