$6.$ You are considering the acquisition of a small office building. The purchase price is $$775,000.$ Seventy$-$five percent of the purchase price can be borrowed with a $30-$year, $7\mathrm{.}50\%$ mortgage. Up$-$front financing costs will total $3\mathrm{.}00\%$ of the loan amount. The expected cash flows assuming a $5-$year holding period are as follows:

Year NOI

$1$ $$48,492$

$2$ $$53,768$

$3$ $$59,282$

$4$ $$65,043$

$5$ $$71,058$

The cash flow from the sale of the property is expected to be $$1,000,000.$

a$.$ What is the net present value of this investment, assuming a $12\mathrm{.}00\%$ required rate of return on levered cash flows?

b$.$ What is the levered internal rate of return?

c$.$ What would you need to consider if the numbers in the chart above represented before tax cash flow?