An analyst is evaluating a real estate investment project using the discounted cash flow approach. The purchase price is $1.5 million, which is financed 20% by equity and 80% by a mortgage loan. It is expected that the property will be sold in three years. The analyst has estimated the following after-tax cash flows during the first three years of the real estate investment project.

Year	1	2	3
Cash flow	$42,650	$47,086	$51,683

It is expected that the property will be sold at the end of the 3 years. The projected sales price is $403,397. Compute the NPV of this project. State whether the investor should undertake the project. The investors cost of equity for projects with level of risk comparable to this real estate investment project is 19%.

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