Ace Investment Company is considering the purchase of the Apartment Arms project. Next years NOI and cash flow is expected to be $2,080,000, and based on Aces economic forecast, market supply and demand and vacancy levels appear to be in balance. As a result, NOI should increase at 4 percent each year for the foreseeable future. Ace believes that it should earn at least a 13 percent return on its investment.

Required:

a. Assuming the above facts, what would the estimated value for the property be now?

b. What going-in cap rates should be indicated from recently sold properties that are comparable to Apartment Arms?

c. What would the estimated value for the property, if the required return changes to 12 percent?