Brad Smith Is Considering the Purchase of a REIT

question 5

Multiple Choice

Brad Smith is considering the purchase of a REIT.The REIT's prospectus projects positive cash flows for Years 1,2,and 3 of $6,000,$7,000,and $8,000,respectively.At the end of three years,Brad anticipates he will sell the REIT for $115,000.He wants to make a return of at least 6 percent.How much should he pay for the REIT?

• A)112,983.2317.
• B)113,383.5314.
• C)114,173.8319.
• D)115,163.5243.

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Definitions:

Usage Rate

The frequency at which a consumer uses a product or service within a given time frame.

Loyalty

A strong feeling of support or allegiance, often seen in the context of brands or organizations as repeated purchases by consumers.

Organizational Market

The market composed of organizations, including businesses and governments, that purchase goods and services for operational needs, production, or resale.

North American Industry

Refers to the sectors and businesses operating within North America, which encompasses diverse industries such as manufacturing, technology, and services.