ASP company is considering the purchase of an wholesale property. After a review of the market and the leases that are in place, ASP believes that first year's cash flow will be $100,000. It also believes that the cash flow will rise in the amount of $5,400 each year for the foreseeable future. It plans to own the property for at least 10 years. Based on a review of sales of properties that are now 10 years older than the subject property, ASP has determined that cap rates are in a range of 10%. ASP believes that it should earn a required return of at least 11 percent. Required: What is the estimated value of this property (assume a 0.10 terminal cap rate)? 2. An investor is considering the purchase f a small office building. The NOI is expected to be the following: Year 1, \$202,000; Year 2, \$212,000; Year 3, \$222,000; Year 4, \$232,000; Year 5, \$242,000. The property will be sold at the end of year 5 and the investor believes that the property value should have appreciated at a rate of 3 percent per year during the five-year period. The investor plans to pay all cash for the property and wants to earn a 10 percent return on investment (IRR) compounded annually. Required: a. What should be the present value of the property today? b. What should be the property value (REV) at the end of year 5 in order for the investor to earn the 10% IRR? c. Based on your answer in (b), if the building could be reproduced for $2,320,000 today, what would be the underlying value of the land