(Valuation of real estate) The Springfield apartment complex once more (previous exercise). Suppose that:

• Cash flows from rentals (including expenses and depreciation) occur in mid-year.

• Next year’s anticipated rental per unit is $15,000, and expenses are $2,000.

In years 2–9, these numbers are expected to increase by 2% annually.

• Other facts about the complex are unchanged.

a. What is the NPV of the purchase?

b. Create a Data Table for the NPV as a function of the annual rent/

expense increase (0%, 1%, 2%, . . ., 5%) and the discount rate (8%, 10%, 12%, . . ., 24%).