Bob buys a property that costs $1,000,000.

Year NOI

1 $100,000

2 $105,000

3 $110,000

Bob will own the property for two years.

The NOI from the property for years 1-3 is shown above.

Bob will sell the property at the end of year 2 (based on the following year's NOI) at a cap rate that is 250 basis points lower than the cap rate at which he bought the property.

What is Bob's annualized IRR for the investment in question?