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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
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.
- What would be the balance of the loan at the end of Year 5 ?
- $1,240,000
- $1,376,320
- $1,232,953
- $1,577,033
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