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:

Concrete Mix

A combination of cement, water, sand, and aggregate (gravel or stone) that when cured, forms a robust and durable construction material.

Rectification

The legal process of correcting errors in a document to reflect accurately the intentions of the parties involved.

Mistake

An error in understanding or judgment that may affect the validity of a contract.

Frustrated Contract

A contract that, through no fault of either party, has become impossible to perform, leading to its termination and relieving both parties from their obligations.