Ryan is considering the purchase of an apartment complex. The following assumptions are made:

• The purchase price is $1,000,000.
• Potential gross income (PGI. for the first year of operations is projected to be $ 171,000.
• PGI is expected to increase at 4 percent per year.
• No vacancies are expected.
• Operating expenses are estimated at 35 percent of effective gross income. Ignore capital expenditures.
• The market value of the investment is expected to increase 4 percent per year.
• Selling expenses will be 4 percent.
• The holding period is 4 years.
• The appropriate unlevered rate of return to discount projected NOIs and the projected NSP is 12 percent.

Ryan comes to you for financial advice.

Calculate the (unlevered) net present value of this investment, assuming no mortgage debt.

• A.

  70,150

• B.

  150

• C.

  -70,150

• D.

  770,150