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 $10\%$

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

the monthly debt service on the office building is $$10,604\mathrm{.}66$

$($Use excel IF needed$)$

$39.$ 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$.$ $ $95,766$