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 IRR.

• A.14.22 percent
• B.0.22 percent
• C.-14.22 percent
• D.19.22 percent