Consider the potential real estate investment priced at Sh. 3,000,000. The cost of land is 40% of the purchase price. The building will be depreciated over 30 years on a straight-line basis. The investor will take a loan of 50% of the purchase price at 14% per annum payable monthly for 10 years. The gross income for the first year is Sh. 600,000 and will increase by 10% in the second year. Operating expense is estimated at 30% of gross income. The property can be sold for Sh. at the end of year two. Tax on profits and capital gains is 30%. Required

Assuming the investor has a required rate of return of 25%. Calculate the after-tax IRR and determine the viability of the investment (30 marks)