Suppose an investor is considering a non$-$residential rental property that has an asking price of $$400,000.$ The land is valued at $$175,000.$ The property has four rental units that are expected to rent for $$1,200$ each per month for the next five years $($PGI each year of $$57,600).$ Vacancy and bad debt allowance is expected to be $5\%$ of potential gross income. Operating expenses are expected to be $16\%$ of effective gross income. A mortgage loan is available for $80\%$ of the purchase price at $8\%$ annual interest with annual payments over $25$ years. The investor faces a $28\%$ tax rate and expects to buy this property on January $1,$ keep it for $5$ years $($through December $31$ five years later, then sell it for $$400,000($less $5\%$ selling expenses$).$ Assume that the taxes from operations facing the investor in our ongoing problem will be as follows in each of years one through five, respectively:

$\backslash$table$[[$Year$,1,2,3,4,5],[$Tax$,4,154,4,185,4,291,4,405,4,529.]]$

Also, assume that the ATER for this investor upon sale of the property at the end of the holding period is $$83,337.$ What is the NPV facing this investor at a required return of $15\%?$

$$123$

$$625$

$$9,235$

$$658$

$15\%$