Prepare a "base case" analysis of the Tower Office building using the following assumptions: Tower Office Assumptions $17,000,000 Purchase Price Gross Floor Area Office Rent Rent Growth Rate Expense Growth Stabilized Vacancy Expenses Terminal Cap Rate Discount Rate 170,000 sf $30/sf 3% 3% 5% $17.5/sf 11.5% 12.5% A fully amortizing 70 percent loan can be obtained at 7 percent interest for 30 years (total annual payments will be monthly payments times 12). The building represents 80 percent of value and is depreciable over 39 years (use 1/39 per year). Capital gains from price appreciation will be taxed at 20 percent and depreciation recapture will be taxed at 25 percent. The potential investor indicates that she is in the 36 percent bracket and has enough passive income from other activities so that any passive losses from this activity would not be subject to any passive activity loss limitation. Develop a 10-year pro forma. (a) Use the pro forma to determine the before-tax IRR (BTIRR) and after-tax IRR (ATIRR). (b) What is the NPV for this property using a 12.5 percent (after-tax) discount rate.