Espada Real Estate Investment Company (EREIC) purchases new apartment complexes, establishes a stable group of residents, and then sells the complexes to apartment management companies. The average holding time is three years. EREIC is currently investigating two alternatives. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) 1. EREIC can purchase Harding Properties for $4,590,000. The complex is expected to produce net cash inflows of $367,200, $512,700, and $882,600 for the first, second, and third years of operation, respectively. The market value of the complex at the end of the third year is expected to be $5,280,400 2. EREIC can purchase Summit Apartments for $3,520,200. The complex is expected to produce net cash inflows of $296,000, $444,300, and $612,900 for the first, second, and third years of operation, respectively. The market value of the complex at the end of the third year is expected to be $4,140,000. EREIC has a desired rate of return of 11 percent. Required a-1. Calculate the net present value and the present value index for Harding Properties. a-2. Calculate the net present value and the present value index for Summit Apartments. b. Which investment opportunity should be taken? (For all requirements, round "Present Value" to the nearest whole dollar amount. Round "Present value index" to 2 decimal places.) Summit Harding Properties Apartments a-1. Net present value a-2 Present value index Which investment opportunity should be taken? b. TABLE 1 PRESENT VALUE OF $1 4% 5% 6% 7% 9% 10% 12% 14% 16% 20% 1 0.961538 0.952381 0.943396 O.934579 0.925926 0.917431 0.909091 0.892857 0.877193 0.862069 0.833333 0.743163 2 0.9245560.907029 0.889996 0.873439 0.857339 0.841680 0.826446 0.797194 0769468 0.694444 0.839619 0.816298 O.793832 0.772183 3 0.888996 0.863838 0.751315 0.711780 0.674972 0.640658 0.578704 4 0.854804 0.822702 0.792094 0.762895 O.735030 0708425 0.683013 0.635518 0.592080 0.552291 0.482253 0.649931 5 0.821927 0.783526 0.747258 0.712986 0.680583 0.620921 0.567427 0.519369 0.476113 0.401878 6 0.790315 0.746215 .704961 0.666342 0.630170 0.596267 O.564474 0.506631 0.455587 0.410442 0.334898 7 0.759918 0.710681 0.665057 0.622750 0.583490 0.547034 0.513158 0.452349 0.399637 0.353830 0.279082 0.730690 0.676839 0.627412 0.582009 0.540269 O.501866 0.466507 0.403883 0.350559 0.305025 0.232568 9 O.702587 0644609 0.591898 0.543934 0.500249 0.460428 0.424098 0.360610 0.307508 0.262953 0.193807 10 0.675564 0.613913 0.558395 0.508349 0.463193 0.422411 0.385543 0.321973 0.269744 0.226684 0.161506 11 0.236617 0.649581 0.584679 0.526788 0.475093 0428883 0.387533 0.350494 0.287476 0.195417 0.134588 0.444012 12 0.624597 0.556837 0.496969 0.397114 0.355535 0.318631 0.256675 0.207559 O.168463 O.112157 13 0.600574 0.530321 0.468839 0.414964 0.367698 0.326179 0.289664 0.229174 0.182069 0.145227 0.093464 0.263331 0.2046 20 14 O.577475 0.505068 0.442301 0.159710 0.125195 0.077887 0.387817 0.340461 0.299246 0.239392 15 0.555265 0.481017 0.417265 0.362446 0.315242 0.274538 0.182696 0.140096 0.107927 0.064905 0.338735 16 0.533908 0.458112 0.393646 0.291890 0.251870 0.217629 0.163122 0.122892 O.093041 0.054088 17 0.513373 0.436297 0.371364 0.316574 0.270269 0.231073 0.197845 0.145644 0.107800 0.080207 0.045073 0.179859 18 0.493628 0.415521 0.350344 0.295864 0.250249 0.211994 0.130040 0.094561 O.069144 0.037561 0.163508 19 0.474642 0.395734 0.330513 0.276508 0.231712 0.194490 0.116107 0.082948 0.059607 0.031301 20 0.456387 0.376889 0.311805 0.258419 0.214548 0.178431 0.148644 0.103667 0.072762 0.051385 0.026084 TABLE 2 PRESENT VALUE OF AN ANNUITY OF $1 7% 10% 14% 20% 4% 5% 6% 8% 9% 12% 16% 0.934579 0.925926 1 0.961538 0.952381 0.943396 0.917431 0.909091 0.892857 0.877193 0.862069 0.833333 1.605232 2 1886095 1.859410 1.833393 1.808018 1.783265 1.759111 1.735537 1.690051 1.646661 1.527778 3 2.775091 2.723248 2.673012 2.624316 2.577097 2.531295 2.486852 2.401831 2.321632 2.245890 2.106481 4. 3.312127 3.239720 3.629895 3.545951 3.465106 3.387211 3.169865 3.037349 2.913712 2.798181 2.588735 4.212364 5 4.451822 4.329477 4.100197 3.992710 3.889651 3.790787 3.604776 3.433081 3.274294 2.990612 6 5.242137 5.075692 4.917324 4.766540 4.622880 4.485919 4.355261 4.111407 3.888668 3.684736 3.325510 7 6.002055 5.786373 5.582381 5.389289 5.206370 5.032953 4.868419 4.563757 4.288305 4.038565 3.604592 6.732745 6.463213 6.209794 5.971299 5.746639 5.534819 5.334926 4.967640 4.638864 4.343591 3.837160 4.606544 4.030967 7.435332 7.107822 6.801692 6.515232 6.246888 5.995247 5.759024 5.328250 4.946372 7.360087 10 7.721735 7.023582 6.710081 6.417658 6.144567 5.650223 5.216116 4.833227 8.110896 4.192472 11 8.760477 8.306414 7.886875 7.498674 7.138964 6.805191 6.495061 5.937699 5.452733 5.028644 4.327060 7.942686 5.197107 4.439217 12 9.385074 8.863252 8.383844 7.536078 7.160725 6.813692 6.194374 5.660292 13 9.985648 9.393573 8.852683 8.357651 7.903776 7486904 7103356 6.423548 5.842362 5.342334 4.532681 14 10.563123 9.898641 9.294984 8.745468 8.244237 7.786150 7.366687 6.628168 6.00 2072 5.467529 4.610567 6.142168 5.575456 15 11.118387 10.379658 9.712249 9.107914 8.559479 8.060688 7.606080 6.810864 4.675473 4.729561 16 11.652296 10.837770 10.105895 9.446649 8.851369 8.312558 7.823709 6.973986 6.265060 5.668497 9.763223 17 12.165669 11.274066 10.477260 9.121638 8.543631 8.021553 7.119630 6.372859 5.748704 4.774634 18 12.659297 11.689587 10.827603 10.059087 9.371887 8.755625 8.201412 7.249670 6.467420 5.817848 4.812195 19 13.133939 12.085321 11.158116 10.335595 9.603599 8.905115 8.364920 7.365777 6.550369 5.877455 4.843496 9.818147 7.469444 20 13.590326 12.462210 11.469921 10.594014 9.128546 8.513564 6.623131 5.928841 4.869580