Fill in the sheet titled $$NPV$-$IRR$.$

Ann will buy the property in $2014,$ she will collect NOI for $5$ years $2015-2019,$ and she will sell it in $2019.$

Ann$$s loan has a $5/4/3/2/1$ prepayment penalty structure, so if she prepays in the first year, she will pay

a penalty equal to $5\%$ of the balance, in the second year she will pay a penalty equal to $4\%$ of the

balance etc.

Ann forecasts NOI will grow at $2\%$ per year, compounded annually.

Ann forecasts she can sell the property in $2019$ at a $6\mathrm{.}25\%$ cap rate.

Recall: $2019=2020$

$2019$

$(3.$a$)$ How much will Ann sell the property for in $2019?$

$(3.$b$)$ How much of a capital gain will Ann earn? $($Hint: capital gain $=$ sale price $$ purchase price$)$

$(3.$c$)$ What is Ann$$s IRR for this investment?

$(3.$d$)$ If Ann$$s discount rate is $25\%,$ what is her NPV$?$ Should she make this investment?

$(3.$e$)$ Plot Ann$$s NPV for discount rates $0\%-100\%.$ Copy and paste the chart below.