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information An investor buys a building for $450,000 cash and leases it for payments of: Year 1 - $75,000 Year 2 - $85,000 Year 3

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An investor buys a building for $450,000 cash and leases it for payments of:

Year 1 - $75,000

Year 2 - $85,000

Year 3 - $90,000

Year 4 - $90,000

At the end of Year 4, the building will be sold for $515,000 in net sales proceeds. Similar investments yield a 15% return.

Questions

1.What is the Net Present Value (NPV)?

2.What is the Internal Rate of Return (IRR)?

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