. Kent decided to invest in a luxurious condominium unit located at Kuala Lumpur that has one tenant. The tenant has a lease that calls for annual rent payments of RM42,000 per year for the next three years. However, after that lease expires, Kent expects to be able to increase the rent by 5% per year for the next seven years. Kent plans to sell the unit for RM2,000,000 ten years from now.

(a) Create a table showing the projected cash flows for this investment assuming that the next lease payment will be made in one year. (11 marks)

(b) Assuming that Kent needs to earn 10% per year on this investment, what is the maximum price that Kent would be willing to pay for the building today? Use the NPV function. (3 marks)

(c) Suppose that the current owner of the building is asking RM900,000 for the building. If Kent paid this price, what annual rate of return would you earn? Should Kent buy the building at this price? (6 marks)

(d) Assume the same context as in part (c), however, Kent requires an annual rate of return of at least 15 percent, ceteris paribus, what is the minimum selling price of the building ten years from now? Use the Solver function. (5 marks) [Total : 25 marks]