DATA CASE: You are a financial analyst at a real estate development company. Your company is evaluating a potential real estate investment opportunity. The property is expected to generate rental income over the next 10 years, and the company plans to hold the property indefinitely after that period. The investment requires an initial outlay of $1,000,000, and the company's required rate of return is 8%. Here's the financial data for this investment: Initial Investment (Year 0): $1,000,000 Expected Annual Rental Income (Years 1-10): $120,000 per year After Year 10, the property is expected to continue generating the same rental income indefinitely. Questions: Calculate the Net Present Value (NPV) of this investment using the provided data and the required rate of return of 8%. Should the company proceed with the investment?

1. After Year 10, the rental income is expected to continue indefinitely. Calculate the present value of the perpetuity using the same 8% discount rate.
2. To make the investment more attractive, the company is considering offering a bonus to the property manager. They plan to pay the property manager an annual bonus of $20,000 starting from Year 1 for the first 10 years (annuity). Calculate the present value of this annuity using the 8% discount rate. 4. Considering the additional cost of the property manager's bonus, recalculate the NPV of the investment. Does the addition of the bonus change the investment decision?