As a newly hired analyst in the capital company PartFinance, you have been asked to assess profitability of a real estate project. The investment involves buying a building for 350 million. The management consider two mutually exclusive applications if the investment is made: (I) Enter into an agreement today on the sale of the apartment building for 400 million to the real estate company BoFint with cash settlement in exactly one year. (II) Enter into a three-year lease agreement with BoFint and an agreement on sale at the end of the lease period. The annual rental amount will amount to 16 million to be paid at the end of each year. Agreed sales amount, to be paid in cash at the end of year 3, is 450 million. Show carefully how to calculate the answers to the questions below: (a) Which return requirements for alternatives (I) and (II) give zero in net present value? (b) Given a 7% return requirement, which alternative do you recommend the management to choose? (c) Explain to the management of PartFinance why the choice of alternative is based on (a) and (b) is not obvious despite the desire for profit maximization.