A commercial property is available for a price of $25\mathrm{.}5$ million and a developer is interested

in purchasing it in order to turn it into a rental property. The developer estimates that the total

refurbishments costs will amount to $3\mathrm{.}1$ million, which will be incurred exactly three months

after purchase.

A potential tenant company has agreed to occupy and rent out the property six months after

the date of purchase. The lease agreement states that the company will rent the office block

for $15$ years and will then purchase the property at the end of the rental period for $28$

million. It is further agreed that rents will be paid quarterly in arrears and will be increased

every $3$ years at the rate of $3\mathrm{.}5\%$ per annum compound. The initial rent has been set at $2\mathrm{.}7$

million per annum with the first rental payment is due exactly three months following the date

of occupation.

Calculate the net present value of the profit from this investment assuming that the

developer earns a rate of return of $9\%$ per annum effective.