Home Depot uses a $150,000$ SF building as its retail store. To developsuch a property, total costs average around $$18,600,000.$ Theseproperties typically lease for around $$15$ per foot $($absolute net$)$ withroughly $$7$ per foot in operating expenses $($annual expensereimbursement of $$1,050,000).$ For a lease vs$.$ own analysis, assumethat Home Depot would either lease or own the property for $20$ years,and use a discount rate of $20\%.$ If the company owned the property, itwould utilize $80\%$ LTV financing, with an interest rate of $7\%$ and $30-$yearamortization. In that case, the ADS would be $$1,187,964$ and the mortgage balance would be $$8,526,251.$ Also assume that the property could be sold for $$28,000,000$ in $20$ years with an equity reversion of $$19,473,749.$ Use for the first two questions.

$1.$ What is the NPV of owning the store?$2-$Consider a small office building where tenants have requested some improvements that would cost $$200,000.$ The increase in NOI is expected to be $$8,000$ per year, and the increase in the net sale price is expected to be $$250,000.$ Assume that the owner expects to hold the property for another $6$ years and has a discount rate of $10\%.$ Based on NPV$,$ does the renovation make sense?