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 at  

 

 $$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 $10\%$ 

 

 Assume that the company bought the office building using $70\%$ mortgage debt at an interest rate of $4\mathrm{.}00\%$ over $240$ months. 

 

a. What would be the balance of the loan at the end of Year $5?$

b. What would be the total cash flows in Year $5,$ taking into consideration the cash flows, annual debt service, sale price and the balance on the loan at the EOY $5?$