Dan has come across an opportunity to buy an apartment building for $1,250,000, but isnt sure. He can get a loan for 80% of the buildings value at 8%, but because of the risks Dans own required return is 12%. Given the following annual cash flows, what is the building worth to Dan?

Gross Rents 210,000

Expected vacancy 7%

Utilities, Insurance, taxes 48,000

Interest 24,000

Maintenance 10,800

Capital Repair Fund 10,000

Mgt. Fees 12,000

Depreciation 32,000

		a. $1,556,250 (50% credit)
		b. $754,166
		c. $1,037,500
		d. $1,020,833