A businesswoman has just purchased a large factory for 6,500,000. She will spend a further 850,000 in refurbishments in four months' time. A printing company has just agreed to lease the factory immediately following the refurbishment. The company will pay rent to the businesswoman from that time and, after 12 years of occupation, will then immediately purchase the factory from the businesswoman. The rent in the first year has been set at 900,000 per annum payable quarterly in advance. The lease agreement states that, at the start of each subsequent year, the rent will increase by 3% per annum on a compound basis. (i) Assuming that rental income is always received quarterly in advance, calculate the price that the businesswoman should sell the factory for in order to earn a rate of return of 12% per annum effective on her investment. [8 marks] (ii) Without doing any further calculations, explain how your answer to part (i) would alter if the rent had been received half-yearly in advance. [2 marks] [10 marks]