QUESTION 3 An investor has projected three possible scenarios for a project as follows: Pessimistic-NOI will be $207,500 the first year, and then decrease 2 percent per year over a five-year holding period. The property will sell for $1.86 million after five years Most likely---NO/ will be level at $207,500 per year for the next five years (level NOI) and the property will sell for $2.06 million Optimistic Nol will be $207,500 the first year and increase 3 percent per year over a five-year holding period. The property will then sell for $2.26 million The asking price for the property is $2.06 million. The investor thinks there is about a 30 percent probability for the pessimistic scenario, a 40 percent probability for the most likely scenario, and a 30 percent probability for the optimistic scenario. Now assume that a loan for $1.56 million is obtained at a 10 percent interest rate and a 15-year term. Calculate the expected BTIRR. Remember to enter your answer as a decimal, not as a percentago QUESTION 4 A developer plans to start construction of a building in one year if at that point rent levels make conspruction feasible. At that time the building will cost $1,380,000 to construct. During the first year after construction would take place, there is a 60 percent chance that Nol will be $178,500 and a 40 percent chance that the NO/ will be $90,200. In either case, NOI would be expected to increase at 2 percent per year after the first year How much should the developer be willing to pay for the land if he wants a 12 percent rate of retur