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Question
Consider the information in the table below. What is the rate of return the investor would earn on the additional funds invested in renovating the property, assuming that the investor would not borrow any additional funds?
| After-tax cash flow from operations if renovated | $ | 75,000 | |
| After-tax cash flow from operations if not renovated | − | 60,000 | |
| Incremental cash flow from operations | $ | 15,000 | |
| Sale proceeds if renovated | $ | 2,500,000 | |
| Sale proceeds if not renovated | 2,250,000 | ||
| Incremental cash flow from sale | $ | 250,000 | |
| Renovation costs | $ | 250,000 |
A) 6.0%
B) 106%
C) $15,000
D) $265,000
Answer
This answer is hidden. It contains 19 characters.
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