Question
Your employer, Kent, LLC, is considering an investment in an office building that has the following cash flows: Purchase in Year 0 $ -2,750,000 Year
Your employer, Kent, LLC, is considering an investment in an office building that has the following cash flows: Purchase in Year 0 $ -2,750,000 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 companys weighted average cost of capital that they use as their discount rate for such calculations is 7% 31. What is the projects IRR? a. 15.11% b. 10.96% c. 10.38% d. 16.12% 32. For Kent, LLC what is the NPV? a. $344,814 b. $-168,158 c. $473,883 d. $490,401 33. In the above problem, you might expect a. The Yield to be higher than the discount rate because you sold the property at a profit. b. The NPV to be positive because the IRR is higher than the discount rate c. The NPV to be negative because the IRR is lower than the discount rate d. All of the above
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