Question 4 (BTCF): An investor is considering an office building investment with the following assumptions: ASSUMPTIONS FOR OFFICE BUILDING INVESTMENT Input Assumption Number of units24 office units at an average of 1,125 square feet per office Asking Price $600,000 Rents $375/month/unit in year 1 ; expected to increase 5% / year V & C Losses 5% of PGI Operating Expenses 30% of EGI Capital Expenditure 10% of EGI Financing Loan - to - value Ratio 80 percent Interest Rate 7 percent Maturity 30 years with monthly payments Holding period 2 years ( to be sold after 2 years) Expected Selling Price NOI of year 3 capitalized at 10% Selling expenses 6 percent of the selling price a. Prepare the before -tax cash flow (BTCF) statement for 2 years b. Calculate the before - tax (BTCF) IRR on this investment