Question
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. 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 8%
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.
35. What would be the monthly debt service on the office building?
A. $11,669
B.$9,544
C.$6,890
D. $1,877
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