Rubio LLC, is considering an investment in an office building that has the following cash flows:

Purchase Year 0.......$-2,150,000

Year 1.....208,000

Year 2.....207,000

Year 3.....220,000

Year 4.....224,000

Year 5.....230,000 and a sale @ $3,050,000 takes place at end of year 5

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

Assume that the company bought the office building using 70% mortgage debt at an interest rate of 4% over 240 months

1. What would be the total cash flows in Year 5, taking into consideration the cash flows, annual debt service, sale price and balance on the loan at end of year 5?

a. 1,662,985

b. 1,937,607

c. 1,189,560

d. 1,343,455