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

Purchase in Year 0 $ -2,750,000

Year 1. 220,000

Year 2.. 226,000

Year 3.. 250,000

Year 4 255,000

Year 5 230,000, and a sale @ $3,290,000 takes place EOY 5

The companys weighted average cost of capital that they use as their discount rate for such calculations is 12%

In the Rubio LLC example above, assume that the company bought the office building using 70% mortgage debt at an interest rate of 4.00% over 240 months.

1. What would be the net cash flows after debt service in year 3 ?
   1. $117,840
   2. $110,019
   3. $100,018
   4. $2,980,000