3. You had a building built 25 years ago for $400,000. The market value today is thought to be $663,000 Straight- line depris being used, with a zero salvage value and a life estimate of 40 years. The building produced rental income last year (year 25) of $120,000 with operating expenses of $17000. The rental income has been increasing by 5% each year while operating expenses have been increasing 2% per year. The tax rate is 28% on ordinary income and 20% on capital gains. The overall inflation rate is expected to average 3.4% for each of the next 4 years. a. Assume this building is kept for 4 more years and sold at the end of year 4 for $700.000. What is the IRR on this decision to keep the building, rent it for the next four years, and then sell it. b. Assume that when this building was built 25 years ago, 25o of its cost was financed with a 40 year loan at 8 per year interest. Redo panta 3. You had a building built 25 years ago for $400,000. The market value today is thought to be $663,000 Straight- line depris being used, with a zero salvage value and a life estimate of 40 years. The building produced rental income last year (year 25) of $120,000 with operating expenses of $17000. The rental income has been increasing by 5% each year while operating expenses have been increasing 2% per year. The tax rate is 28% on ordinary income and 20% on capital gains. The overall inflation rate is expected to average 3.4% for each of the next 4 years. a. Assume this building is kept for 4 more years and sold at the end of year 4 for $700.000. What is the IRR on this decision to keep the building, rent it for the next four years, and then sell it. b. Assume that when this building was built 25 years ago, 25o of its cost was financed with a 40 year loan at 8 per year interest. Redo panta