1. There are two mutually exclusive projects. Project A requires a $600,000 initial investment and is expected to provide $120,000 annual net cash inflows for 6 years. Project B requires a $740,000 initial investment and is expected to provide $200,000 annual net cash inflows for 4 years.

Which project should you accept according to IRR method when your cost of capital is 10%?

		A. Project A
		B. Project B
		C. Both
		D. Neither of these

2. Leveraged IRR:

		A. estimates future cash inflows with gross operating income.
		B. eliminates loan related amounts in the IRR calculation.
		C. is less frequently used than unleveraged IRR since almost all commercial real estate is financed with debt.
		D. uses the total purchase price as the initial cash outflow.

3. Based on the cost replacement approach, how much is estimated value of the property?

Please utilize below information to answer the question.

Current value of land $3,000,000

Economic deductions $ 700,000

Functional obsolescence $ 560,000

Furniture, fixtures and equipment $ 470,000

Physical deterioration $1,200,000

Cost to rebuild the physical structure $4,300,000

		A. $ 1,710,000
		B. $ 5,310,000
		C. $ 6,770,000
		D. $10,230.000