Investor Capital Inc. (ICI) has decided to enter a joint venture with Property Developer Inc. (PDI) to develop and operate an Office building. The project will require an initial equity investment of $50 million, with ICI investing $ 45 million and PDI investing the remaining $5 million. For simplicity, we will assume that each party invests it capital and then participates in year-end cash flows from operations, which are projected as follows: It is further assumed that the property will be sold at year 5 and that the net proceeds from the sale will provide $75 million to be distributed to the investors. The joint venture partnership agreement specifies that ICI will receive a 5 percent non-cumulative, preferred return on its $45 million in equity. However, this distribution must be paid before PDI receive any cash from operations. After ICI receives its preferred return, PDI will receive a 5% non-cumulative on its equity capital of $5 million. Any remaining cash flow will be split 50% to each party. When the property is sold, proceeds from the sale will first be used to provide ICI with a capital recovery equal to its initial equity investment. Next, PDI will receive and amount equal to its initial investment. ICI will then receive an amount sufficient to earn a 12% return on the equity investment. All remaining cash proceeds are to be split 5050. (15 points) Using the above assumptions, estimate: 1. The total cash flows available to the Joint Venture. 2. The cash flows each party (ICI - PDI) will receive from operations. 3. The cash flow each party would receive from sale of the property. 4. The IRR of each party after all cash flows are distributed. Investor Capital Inc. (ICI) has decided to enter a joint venture with Property Developer Inc. (PDI) to develop and operate an Office building. The project will require an initial equity investment of $50 million, with ICI investing $ 45 million and PDI investing the remaining $5 million. For simplicity, we will assume that each party invests it capital and then participates in year-end cash flows from operations, which are projected as follows: It is further assumed that the property will be sold at year 5 and that the net proceeds from the sale will provide $75 million to be distributed to the investors. The joint venture partnership agreement specifies that ICI will receive a 5 percent non-cumulative, preferred return on its $45 million in equity. However, this distribution must be paid before PDI receive any cash from operations. After ICI receives its preferred return, PDI will receive a 5% non-cumulative on its equity capital of $5 million. Any remaining cash flow will be split 50% to each party. When the property is sold, proceeds from the sale will first be used to provide ICI with a capital recovery equal to its initial equity investment. Next, PDI will receive and amount equal to its initial investment. ICI will then receive an amount sufficient to earn a 12% return on the equity investment. All remaining cash proceeds are to be split 5050. (15 points) Using the above assumptions, estimate: 1. The total cash flows available to the Joint Venture. 2. The cash flows each party (ICI - PDI) will receive from operations. 3. The cash flow each party would receive from sale of the property. 4. The IRR of each party after all cash flows are distributed