Calculate the (1) going-in and (2) going-out cap rates, the (3) gross development profit margin, and the 4) NPV of the project cash flow for the following development:

Planning and Construction phase: Development is expected to take three years and cost a total of $11 million. The developer will incur a $4 million expense in the first year, $4 million in year 2, and $3 million in year 3. The 3-year Treasury rate is 2%, and the risk premium for the development is 50 basis points.

Operating phase: The developer has managed to secure a tenant for the entire building with a pre-leasing agreement. Thus, the building will have a stabilized NOI of $1.2 million as soon as development finishes. The developer expects to sell the building for $15 million after a 3-year holding period. Expected revenue should be discounted at 7%.