A firm considering the purchase of forty year old building, the following pertinent data were provided:

Acquisition Cost 12,000,000

Economic life (remaining)10 years

Salvage Value 200,000

Annual Rental Income 5,000,000

Annual Expense 3,000,000

Net Income before Tax and Depreciation2,000,000

Depreciation (straight line method) 1,000,000

Income Tax (withheld by lessor) 50,000

Average Net Annual Earnings950,000

Desire rate of Return 25%

Require: Evaluate the proposal usaing the 3 Basic method