A property development company has just purchased a retail outlet for $4,000,000. A further $900,000 will be spent refurbishing the outlet in six months' time. An agreement has been made with a prospective tenant who will occupy the outlet beginning one year after the purchase date. The tenant will pay rent to the owner for five years and will then immediately purchase the outlet from the property development company for $6,800,000. The initial rent will be $360,000 per annum and this will be increased by the same percentage compound rate at the beginning of each successive year. The rental income is received quarterly in advance. [9] Calculate the compound percentage increase in the annual rent required to earn the company an internal rate of return of 12% per annum effective.