Which of the following represents the formula for the annual marginal rate of return (MRR) when trying to decide whether to hold or sell a property? ATCFS equals the after-tax cash flow from sale and ATCFO equals the after-tax cash flow from operations.
A) MRR = (ATCFS (year t + 1) + ATCFO (year t + 1) - ATCFS (year t) - ATCFO (year t) / ATCFS (year t)
B) MRR = (ATCFS (year t + 1) - ATCFO (year t + 1) + ATCFS (year t) ) / ATCFS (year t)
C) MRR = (ATCFS (year t + 1) + ATCFO (year t + 1) - ATCFS (year t) ) / ATCFS (year t)
D) MRR = (ATCFS (year t + 1) + ATCFO (year t + 1) + ATCFS (year t) ) / ATCFS (year t)
Correct Answer:
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