You are considering the acquisition of a small office building. The purchase price is $975,000. Sixty-five percent of the purchase price can be borrowed with a 30-year, 5 percent mortgage. Payments will be made annually. Up-front financing costs will total two percent of the loan amount. The expected before-tax cash flows from operations--assuming a 5-year holding periodare as follows:

Year	BTCF
1	$48,492
2	53,768
3	59,282
4	65,043
5	$71,058

The before-tax cash flow from the sale of the property is expected to be $495,050. What is the net present value of this investment, assuming a 10 percent required rate of return on levered cash flows?

Question 27 options:

a)

$90,295

b)

$35,908

c)

$18,788

d)

-$11,620

e)

-$105,396