Commercial Real Estate Investment

Bob buys a property that costs $1,000000.

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 to the right:

Bob will sell the property at the end of year 2 at a cap rate that is 250 basis points lower than the cap rate at which he bought the property.

Use the above information for quation Q14-15

14. Assume Bob does not use leverage. Find the NPV of Bob's investment if his discount rate is 20%.