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Brad Smith Is Considering the Purchase of a REIT

Question 5

Multiple Choice

Brad Smith is considering the purchase of a REIT.The REIT's prospectus projects positive cash flows for Years 1,2,and 3 of $6,000,$7,000,and $8,000,respectively.At the end of three years,Brad anticipates he will sell the REIT for $115,000.He wants to make a return of at least 6 percent.How much should he pay for the REIT?


A) 112,983.2317.
B) 113,383.5314.
C) 114,173.8319.
D) 115,163.5243.

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