THE FIRST QUESTION I HAVE ANSWER ALREADY... I AM JUST INCLUDING FOR CONTEXT

1. Consider a property with expected future net cash flows of $15,000 per year for the next 5 years (starting one year from now). After that, the operating cash flow should step up to $20,000, for the following 5 years. If you expect to sell the property 10 years from now for a price 10 times the net cash flow at that time, what is the value of the property if the required return is 14%

Value of Property is $9,93,589

Rate	14%
Period		FV
1	-15000	$55,608
2	-15000	$48,779
3	-15000	$42,789
4	-15000	$37,534
5	-15000	$32,925
6	-20000	$38,508
7	-20000	$33,779
8	-20000	$29,631
9	-20000	$25,992
10	-20000	$22,800
	Total FV	$3,68,345
	10 Times	$36,83,453
	PV	$9,93,589

2. In the previous question, suppose the seller of the building wants $150,000. (a) Should you do the deal? Why or why not? (b) What is the IRR if you pay $150,000? How does this compare to the required return of 14%? (c) What is the IRR if you could get the seller to accept $14 for the property? What is the NPV at that price?

3. Suppose that the required return on the property in the problem 1 is 11% instead of 14%. What would the value of the property be? By what percentage has this value changed as a result of this 300 basis point change in the required return?

4. Go back to the property in the problem 11 with the 14% required return. What is the value of the property if the cash flow increases 7.5% in year 6, to $21,500, instead of the original? By what percentage has this changed the property value?