Decision of housing investment Assume Mr. A is considering a real estate investment and he is currently facing the following situation: Apartment Complex (total) cost $3 million Structure (building only) is worth $2 million Rental proceeds per year =300,000 Closing Cost (buy) =2% of purchase price Expected closing Cost (sell) =2% of sale price Projected expense per year Utilities 40000 Insurance 10000 Property Tax 40000 Repair 12000 Depreciation =1//20 per year Projected Value of entire property after 4 years =$4 million. Tax rate =30% Required return =10% before taxes He plans to hold the building for only 3 years. Use Net Present Value method to help him decide if this will be a good investment.