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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.

  1. What would be the balance of the loan at the end of Year 5 ?
    1. $1,240,000
    2. $1,376,320
    3. $1,232,953
    4. $1,577,033

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