Assume that you were given an opportunity to purchase a real estate project using an equity participation loan. The NOI for each year of the holding period are shown below: 2 Annual payments are being used to make the problem easierl : Year 1 Year 2 Year 3 Year 4 NOI124,787132,225 139,954 148,468 Additional information: 1) Purchase price $1,900,000 2) Estimated value of land $500,000 3) Anticipated mortgage terms: value ratio 80 a)Loan to b) Interest rate 5.5% c) Years to maturity 25 d) Points charged3 e) Prepayment penalty-2% of outstanding balance f) Level payment, fully amortized g) Fixed interest rate, monthly payments4) Participation terms: a) Share of N01-17.5% over $130,000 b) Share of Appreciation: 20% Future sales price $2,350,000 Estimated selling expenses as proportion of future sales prices 5% 7) Client's minimum required before-tax rate of return on equity 5) 6) 12% Calculate: The before-tax cash flows and the before-tax equity reversion (you do not need to calculate the after-tax cash flows or reversion) a. b. The before-tax net present value to the investor