$1.$ Open the Burton workbook.

$2.$ The initial cost to build the office building is $$3,000,000.$ Kelly determines that the useful life of the building is $20$

years with a salvage value of $$500,000.$ Enter this information into the Investment Analysis worksheet.

$3.$ Kelly expects the office rentals to generate $$0$ of cash in Year $0,$ $$500,000$ in Year $1,$ and $$1,200,000$ in Year $15.$

Calculate the income values in Year $2$ through Year $14$ assuming a linear trend.

$4.$ Set the Year $0$ cost of building the office space to $$3,000,000,$ and set this cost to $$0$ for Year $1$ through Year $15.$ Set

the operating expenses to $$0$ in Year $0,$ $$270,000$ in Year $1,$ and $$450,000$ in Year $15.$ Calculate the Year $2$ through

Year $14$ operating expense values assuming a linear trend. Calculate the total expenses incurred by the office

building in each year.

$5.$ Calculate the initial earnings from the office building for Year $0$ through Year $15.$

$6.$ The depreciation of the office building is $$0$ in Year $0.$ In Year $1$ through Year $15,$ calculate the amount that the

building depreciates in value each year under declining balance depreciation.

$7.$ Calculate the taxable income from the office building for Year $0$ to Year $15.$

$8.$ Assume a $32\%$ tax rate on the taxable income. Taxes are only owed if the taxable income for any year is greater

than $$0,$ calculate the amount of taxes owed for each year.

$9.$ Calculate the net income from the office building for Year $0$ through Year $15.$

$10.$ Calculate the Year $0$ through Year $15$ cash flow from the office building. The cash inflow is equal to the taxable

income with depreciation added back. The Year $0$ through Year $15$ cash outflow is the taxes owed.

$11.$ Calculate the net cash flow for Year $0$ through Year $15.$

$12.$ Calculate the cumulative cash flow for Year $0$ through Year $15.$ Based on these projections, when will the initial

investment be paid back?

$13.$ Calculate the net present value of the investment. Kelly wants the investment to show at least a $7\%$ rate of return. Is

the proposed office building profitable in terms of its net present value?

$14.$ Calculate the internal rate of return for the investment. Will the investment in the office building generate the

return Kelly is looking for?