A property could be sold today (year 0)to provide an after-tax cash flow from sale of $800,000. if sold next year (year 1), the property is expected to generate after-tax cash flow from operations of $24,000 and additionally provide an after-tax cash flow of $824,000 from the sale.

A) What is the marginal rate of return for holding the property for an additional year and selling at the end of year 1?

B) As an alternative, the owner can forgo the sale and instead improve the property investing $50,000 in year 0. That will the annual after-tax cash flow from operations by $5,000 - from $24,000 to $29,000 per year. A sale at the end of year will generate an additional $75,000 incremental increase in after-tax cash flows is the internal rate of return (IRR) on the incremental cash flows?