An investor is considering the acquisition of a "distressed property" which is on Northlake Bank's REO list. The property is available for

$$202,000$ and the investor estimates that he can borrow $$160,000$ at $4\mathrm{.}5$ percent interest and that the property will require the

following total expenditures during the next year:

Required:

a$.$ The investor is wondering what such a property must sell for after one year in order to earn a $20$ percent return $($IRR$)$ on equity.

b$.$ The lender is now concerned that if the property does not sell, investor may have to carry the property for one additional year. He

believes that he could rent it $($starting in year $2)$ and realize a net cash flow before debt service of $$1,800$ per month. However, he

would have to make an additional $$7,800$ in interest payments on his loan during that time, and then sell. What would the price have to

be at the end of year $2$ in order to earn a $20$ percent IRR on equity?

Complete this question by entering your answers in the tabs below.

The investor is wondering what such a property must sell for after one year in order to earn a $20$ percent return $($IRR$)$ on

equity.

Note: Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.