13. You do research and find that similar properties are selling at an 11% cap rate. Using an 11% cap rate, what price would you offer for this property?

14 (2 points). Suppose you buy the property at the asking price of $7,000,000 and own it for exactly 1 year.

You make the down-payment in part (9).

You collect the NOI in part (3).

You make the annual mortgage payment in part (10).

In two years, the NOI is expected to be the same.

You sell the property at the end of year 1, at a cap rate of 50 basis points below the cap rate in part (11) and you pay off the loan balance when you sell.

Compute the IRR on this investment. Write your answer in percent, but do not include the % sign.

15. (2 points)

What should be the cap gains tax rate so that the IRR in question 14 is 30%? Suppose there is no depreciation, and no deductions are possible. Write your answer in percent, but do not include the % sign.