ABC Fund has decided to enter a joint venture with Newton Development Inc. to develop and operate an office building. The joint venture will require an initial investment of $100 million to cover all the development costs. There will be no debt financing for the joint venture. Each partner invests its capital at the beginning of the first year and cash flow from operations is projected as follows:

Year 1.	$0
Year 2	$2,500,000
Year 3	$4,000,000
Year 4	$9,000,000
Year 5	$15,000,000
Year 6	$18,000,000
Year 7	$20,000,000

It is expected that the property will sell for $180 million at the end of year 7.

ABC Fund will invest $90 million and Newton Development will invest the remaining $10 million. The development costs already include a developer fee to Newton and the cash flow projections for each year above are net of a property management fee being paid to Newton Development Inc.

ABC Fund will receive a 5% preferred return that is noncumulative. After ABC is paid its preferred return, Newton Development Inc. will receive a 5% operating return that is noncumulative on its contributed capital. Remaining cash flows from operation, if any, will be split 50-50 to each party. When the property is sold, proceeds from the sale will be distributed as follows:

1. First, repay the initial capital investment by ABC Fund

2. Next, repay the initial capital investment by Newton Development Inc.

3. Next, pay ABC fund a 13 percent IRR preference on its investment

4. Thereafter, split all proceeds 50-50

Please: Calculate the cash flows received by each party and calculate the expected IRR for each party.

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