A real estate broker is offering a commercial property building for sale that has the following characteristics:

1. The asking price is $5.5M, with land valued at $500,000.

2. The 210 commercial units rent for $750 per month with rent expected to increase by 3% per year starting at year 2.

3. Vacancy and bad debt allowance is 8% of the potential gross income.

4. Operating expenses are expected to be 38% of effective gross income.

5. The real estate agent estimates that the value of the property, net of selling expenses, will be $6.2M at the end of a five-year investment horizon.

6. A 14%, 20-year mortgage for $4M is available with monthly payments.

7. The cost recovery allowance recapture rate is 25%.

8. The investors ordinary income tax rate is 28%.

9. The investors capital gain tax rate is 15%.

10. The appropriate discount rate for this investment (required return) is 18%.

Calculate the relevant cash flows for this investment and apply the NPV and IRR rules to decide whether to pursue this project.