CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

An investor is considering building a small office park that she plans to hold for five years before selling. The investor's initial outlay of $250,000 would yield after-tax cash flows in years one through five of $35,000, $38,000, $42,000, $48,000, and $54,000, respectively. It is anticipated that the office park will be sold at the end of the fifth year for net after-tax proceeds of $275,000. If the investor has a required rate of return of 16%, the net present value of this real estate investment would be closest to:
A. -$14,773.
B. $18,471
C. $27,899
Explanation: The net present value would be computed as:

User Contributed Comments 2

User Comment
Bibhu The way to calculate in the BA II plus as follows.
1. CF
2. 2nd + clear work.
3.250000 +/- Enter ( CF0= -250000)
4. C01= 35000, F01=1
C02= 38000, F02 =1
C03= 42000, F03 =1
C04= 48000, F04 =1
C05= 54000+27500 F05=1
5.CPT + NPV
6. I =16
7.down arrow
8. CPT NPV = 18471
kellyyang Saving time !
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