Suppose an Investor Is Interested in Purchasing the Following Income

question 20

Multiple Choice

Suppose an investor is interested in purchasing the following income producing property at a current market price of $490,000. The prospective buyer has estimated the expected cash flows over the next four years to be as follows: Year 1 = $48,000, Year 2 = $49,440, Year 3 = $50,923, Year 4 = $52,451. Assuming that the required rate of return is 14% and the estimated proceeds from selling the property at the end of year four is $560,000, what is the NPV of the project?

• A) -$12,860.53
• B) $145,574.52
• C) $331,564.96
• D) $477,139.47

---

Definitions:

Female Athlete Triad

A syndrome in women and girls who are physically active, characterized by insufficient calorie intake, menstrual disturbances, and decreased bone mineral density.

Calcium Intake

The amount of calcium consumed through diet and supplements, important for bone health and other bodily functions.

Eating Disorders

Mental disorders characterized by abnormal or disturbed eating habits which negatively affect a person's physical or mental health.

Insulin Resistance

A condition in which cells in the body respond poorly to insulin, leading to elevated blood sugar levels and increasing the risk of type 2 diabetes.