An investor would like to purchase a new apartment property for $$2$ million. However, she

faces the decision of whether to use $70$ percent or $80$ percent financing. The $70$ percent loan can

be obtained at $10$ percent interest for $25$ years. The $80$ percent loan can be obtained at $11$ percent

interest for $25$ years.

NOI is expected to be $$190,000$ per year and increase at $3\%$ annually, the same rate at which the

property is expected to increase in value. The building and improvements represent $80\%$ of

value and will be depreciated over $27\mathrm{.}5$ years. The project is expected to be sold after five

years. Assume a $36\%$ tax bracket for all income and capital gains taxes.

What would the BTIRR be for the $70\%$ loan $($in decimals, rounded to three digits$)?$

What would the BTIRR be for the $80\%$ loan $($in decimals, rounded to three digits$)?$