Calculate the 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 $10million. The developer will incur a $5million expense in the first year, $4 million in year 2, and $1million 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%