Q2. XYZ company is considering building a new office building. XYZ already owns a plot of land worth $2M and has paid an architectural firm $300k for building designs. Construction cost for the building is $1M. Projected rent income from the building is $400k/year and interest expense will be $300k/year. After three years XYZ expects to sell the building and land for $2.5M. If XYZ has a required rate of return of 10%, what is the NPV and IRR of building the office building?

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