Garcia Developers Will Erect a Small Office Building at a Cost

question 25

Multiple Choice

Garcia Developers will erect a small office building at a cost of $4,500,000. They have a client who will lease the space for 5 years at a price that will produce free cash flows of $150,000 per year. For approximately how much would they need to sell the building for at the end of the 5th year to reach break-even NPV? Garcia uses a discount rate of 10% for projects of this type.

• A) $3,750,000
• B) $5,755,936
• C) $6,331,530
• D) $6,964,683

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