You Expect Annual Cash Flows from a Certain Property as Follows

question 16

Multiple Choice

You expect annual cash flows from a certain property as follows: $\begin{array}{|c|c|}\hline \text { Year 1 } & \$ 20,000 \\\hline \text { Year 2 } & \$ 22,000 \\\hline \text { Year } 3 & \$ 30,000 \\\hline \text { Year } 4 & \$ 31,000 \\\hline \text { Year } 5 & \$ 40,000 \\\hline\end{array}$ In addition, you expect that you can sell the property at the end of the 5^th year for 10 times its expected cash flow that year. If the opportunity cost of capital is 10% per year, then what is the net present value NPV) of a deal in which the investor has to pay $350,000 for the property at the end of Year 0, one year prior to the first cash flow) ?

• A) -$19297.
• B) +$3,282.
• C) +$38,610.
• D) None of the above.

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Definitions:

Group Attitude Scale

A measure used to assess the collective attitudes or opinions of a group towards a particular object, idea, or person.

Tuckman

A theoretical model describing the stages of group development: forming, storming, norming, performing, and adjourning.

Stages Of Development

Describes the phase-based progression that groups or individuals undergo, from formation to termination, each stage characterized by specific challenges and behaviors.

Forming

The initial stage in group development where members meet and start to understand the group’s purpose.