A real estate investor is considering the purchase of a four-unit office building. The following information is known: The purchase price is $975,000 with an additional $8,800 in acquisition costs. The first year's rent is $3,000 per unit per month. Rents are expected to increase at a rate of 5 percent per year. Vacancy is estimated to be 7.50 percent of gross revenue. Operating expenses are expected to be 32 percent of EGI. Of the total cost, 78 percent is depreciable. The project can be financed with a first mortgage of $720,000 at an interest rate of 6.00 percent for 30 years, monthly payments. Financing costs (discount points, etc.) are estimated at 5 percent of the loan amount. There is a prepayment penalty of 4 percent of the outstanding balance if the loan is paid off within the first six years of the mortgage life. The value of the investment is expected to increase at a rate of 5 percent per year. Selling expenses equal 8 percent of the selling price. The investor's holding period is three years. The investor is considered an active participant in the project and is in a 30 percent marginal tax bracket. The investor's required annual after-tax equity yield is 12 percent. Depreciation recovery is taxed at 25% and long-term capital gains are taxed at 20%. 1. What is the gross rent in year one? 2. What is the gross rent in year three