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14. Trenton Corporation, which is growing 20% per year, just completed a sale-leaseback of 200 res- taurants for $1 billion. Net proceeds after taxes and payment of debt is $620 million. Which strategy for use of the remaining funds will provide the best long-term return for shareholders? A. Pay additional dividends and buy back stock B. Reinvest the funds into Trenton's core restaurant business C. Acquire other restaurant chains D. Keep funds on the balance sheet for future contingencies 15. You are preparing a five-year proforma for ACME Apartment Realty Fund I. The fu following data; $100M in total assets with 75% debt at 5% interest only, risk free rate of 3.5%, own- ership split of 75%/25%, preferred return of 8%, inflation rate of 3% and portfolio valued at a 7.0% cap rate. What is the total cash flow distributed to the investors in year one of the proforma? A. $2,795,000 B. $2,937,500 C. $2,280,000 D. $2,100,000

14. Trenton Corporation, which is growing 20% per year, just completed a sale-leaseback of 200 res- taurants for $1 billion. Net proceeds after taxes and payment of debt is $620 million. Which strategy for use of the remaining funds will provide the best long-term return for shareholders? A. Pay additional dividends and buy back stock B. Reinvest the funds into Trenton's core restaurant business C. Acquire other restaurant chains D. Keep funds on the balance sheet for future contingencies 15. You are preparing a five-year proforma for ACME Apartment Realty Fund I. The fu following data; $100M in total assets with 75% debt at 5% interest only, risk free rate of 3.5%, own- ership split of 75%/25%, preferred return of 8%, inflation rate of 3% and portfolio valued at a 7.0% cap rate. What is the total cash flow distributed to the investors in year one of the proforma? A. $2,795,000 B. $2,937,500 C. $2,280,000 D. $2,100,000

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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14. Trenton Corporation, which is growing 20% per year, just completed a sale-leaseback of 200 res- taurants for $1 billion. Net proceeds after taxes and payment of debt is $620 million. Which strategy for use of the remaining funds will provide the best long-term return for shareholders? A. Pay additional dividends and buy back stock B. Reinvest the funds into Trenton's core restaurant business C. Acquire other restaurant chains D. Keep funds on the balance sheet for future contingencies 15. You are preparing a five-year proforma for ACME Apartment Realty Fund I. The fund has the following data; $100M in total assets with 75% debt at 5% interest only, risk free rate of 3.5%, own- ership split of 75%/25%, preferred return of 8%, inflation rate of 3% and portfolio valued at a 7.0% cap rate. What is the total cash flow distributed to the investors in year one of the proforma? A. $2,795,000 B. $2,937,500 C. $2,280,000 D. $2,100,000
Transcribed Image Text:14. Trenton Corporation, which is growing 20% per year, just completed a sale-leaseback of 200 res- taurants for $1 billion. Net proceeds after taxes and payment of debt is $620 million. Which strategy for use of the remaining funds will provide the best long-term return for shareholders? A. Pay additional dividends and buy back stock B. Reinvest the funds into Trenton's core restaurant business C. Acquire other restaurant chains D. Keep funds on the balance sheet for future contingencies 15. You are preparing a five-year proforma for ACME Apartment Realty Fund I. The fund has the following data; $100M in total assets with 75% debt at 5% interest only, risk free rate of 3.5%, own- ership split of 75%/25%, preferred return of 8%, inflation rate of 3% and portfolio valued at a 7.0% cap rate. What is the total cash flow distributed to the investors in year one of the proforma? A. $2,795,000 B. $2,937,500 C. $2,280,000 D. $2,100,000
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