1.A prospective purchaser is interested in making an all cash offer in the amount of $1,800,000 for the property.His plan is to hold the property for 5 years and then sell it.He has completed his review of the property's financial reports and other data and has determined that with his extensive management experience in retail properties and excellent staff, he can improve the property's net operating income (cash flow) over his 5 year ownership period as follows:

Year Net Operating Income

1$193,421

2$201,297

3$209,496

4$218,024

5$226,897

In addition, he believes he call sell this property for $2,200,000 with total brokerage and closing costs of 3% of the sales price at the end of year 5.The purchaser has a desired equity return of 12% (he is discounting the yearly cash flows using a 12% discount rate).Show all work in answering questions (a), (b) and (c) below:

a.Calculate the Net Present Value of this investment using the desired equity return of 12%.Include a table showing the keystrokes you used to determine your answer.

b.Calculate the purchaser's actual IRR on this investment.

Should the purchaser proceed with offering $1,800,000 for the property? If Yes, why?If No, why no