(7 marks) Suppose you want to buy a rental property priced at 500,000. Rent is paid quarterly. 1st year: 4,000 per quarter; 2nd year: 5,000 per quarter; At the end of the 2nd year, the property will be sold for $550,000.

(a)(6 marks) Calculate the net present value (NPV) of the investment. Assume discount rate is j2=5%. Hint: get the effective rate given quarterly payment and j2=5%, and then use it to get NPV.

(b) (1 mark) Calculate the internal rate of return of the investment.