You Estimate That the Little Drive-Through Coffee Kiosk You Own

question 12

Multiple Choice

You estimate that the little drive-through coffee kiosk you own will generate ordinary annuity after-tax cash flows of $150,000 per year for the next ten years. If you discount these cash flows at an annual rate of 14%, what is the present value of your expected cash flows?

• A) $782,417.35
• B) $891,955.78
• C) $1,500,000
• D) $2,900,594.27

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Definitions:

Full

Typically refers to the maximum capacity or entire amount of something, without lacking or being partial.

Partial

Relating to or affecting only a part; not total or complete.

Quiet Enjoyment

A legal principle that assures the possessor of a property or tenant the right to use the property without interference from the landlord or others with superior title.

Eviction

The legal process through which a tenant is forced to leave the property they are renting.