An investment group requires a 12% rate of return as well as at least $2,000,000 in value enhancement. It is considering some alternatives for an investment property purchased five years ago. They would like the real estate manager to perform an analysis of the next five years, assuming the sale at the end of year five. The property was purchased based on the following information. (Questions 1-2) Purchase price: $4,500,000 Initial loan amount: $2,900,000 Interest rate: 8% Loan term: 30 years Current (going-in) market capitalization rate: 8% Going-out capitalization rate: 10% Cost of sale: 3.5% Gross potential income (GPI): 2,500,000, expected to increase by 3% per year starting next year Operating expenses: $900,000, expected to increase by 2% per year starting next year Based on this midstream analysis, what is the IRR in year five?