Alex has find a house at ABC city for sale for $170,00000. It is estimated that $90,00000 is the value of the land and $80,00000 is the value of the house. He is purchasing the house on January 1 to rent and plans to own the house for 10 years. After 10 years, it is expected that the house and land can be sold on December 31 for $580,0000. Total annual expenses (maintenance, property taxes, insurance, etc.) are expected to be $5,50000 per year. The rental income is expected to be $6,00000 per year with annual increment of 7%. The house would be depreciated by 10% . Capital gain are taxed at 5%. Determine the following:

a) Construct the after-tax cash flow for the 10-year project life.

b) Determine the after-tax rate of return on this investment.

c) If Alex could sell the house after 3 years at $250,00000 would his rate of return be better than if he kept for 10 years? It is suggested to find actual ROR and make comparison