Evaluate the purchase of an existing 1050 unit apartment complex for $15,000,000. The building is assumed to have a 20 year functional life. Treat the rents as being collected at the end of each yr. along with associated var cost and fixed cost. Assume rent controls will prohibit the rent from being raised over the life of the building. Assume that the underlying property reverts to original owners after 20 yrs, and you will also be responsible for demolition and clean up costs, tobe incurred at the end of buildings life.

-rental are estimated at 945 units per year

-each unit will be rented for a cumulative monthly amount of $15,000 per year

-cost per unit when rented $900 per year

-fixed cost $2,000,000 per year ,other than initial investment

-demolition/ clean up $8,500,000 after clean up

-straight line depreciation

-project financed at 7% (before tax) using debt

-tax rate %35

Develop pro forma income statement and compute after tax operating cash flow

Question: what is the IRR before tax?