Use this information to answer the following 3 questions, An investor is considering buying a residential income property for $500,000, and holding it for three years. The expected equity cash flows after tax (ATCF) from operation are: Year 1 = $16,000 Year 2 = $14,000 Year 3 = $12,000 A 75% of value mortgage is available; the remaining balance, after 3 years, will be $365,501. Total depreciation to be taken over the holding period will equal $43.636 on improvements with a beginning basis of $400,000. The investor is in the 28% of ordinary capital gain tax bracket while the depreciation recapture rate is assumed to be 28% in this period. The investor desires a 12% after-tax return on the equity investment. The property is expected to sell for $575,000 before the depreciation recapture tax is in effect; there will be a 6% sales commission. Based on tax laws assumed here, answer the following 3 questions.

A- What is the total capital gain tax liability upon sale?

B- If an investor has a required rate of return of %12 what is the projects net present value?

C- What is its IRR?