Questions 31-40 are four (4) points each. Your employer, Kent, LLC, is considering an investment...
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Questions 31-40 are four (4) points each. 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%
In the Kent, 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 is the leveraged IRR of the project ?
a. 32.15%
b. 24.58%
c. 21.48%
d. 22.85%
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