Venture Capital Limited has formed a private real estate syndication to acquire and operate the Tower Office Building. Venture will act as the general partner and will have $35$ individual limited partners. The venture to be undertaken and relevant cost and financial data are summarized as follows:

Cost breakdown

Land $ $1,000,000$

Improvements $9,000,000($capitalized$)$

Points $100,000($amortized over loan term$)$

Subtotal $$10,100,000$

Organization fee $100,000($amortized over $5$ years$)$

Syndication expenses $100,000($capitalized$)$

Total funding required $$10,300,000$

Financing

Loan amount $ $8,000,000$

Interest rate $4\mathrm{.}75\%$

Term $25$ years $($monthly payments$)$

Points $$100,000$

Partnership facts and equity requirements

Organization: December, year $1$

Number of partners: $1$ general partner and $35$ limited partners

Equity capital contribution: General partner, $10\%$; limited partners, $90\%$

Cash assessments: None

Cash distributions from operations: General partner, $10\%$; limited partners, $90\%$

Taxable income and losses from operations: General partner, $10\%$; limited partners, $90\%$

Allocation of gain or loss from sale: General partner, $15\%$; limited partners, $85\%$

Cash distribution at sale: Based on capital account balances

Operating and tax projections

Potential gross income $($year $2)$ $$1,300,000$

Vacancy and collection loss $10\%$ of potential gross income

Operating expenses $($year $2)35\%$ of effective gross income

Depreciation method Straight$-$line, $39$ years

Projected growth in income $2\%$ per year

Projected resale price after $5$ years $$12,750,000$

Limited partners$$ tax rate $24\%$

General partner$$s tax rate $24\%$

Selling expenses $5\%$

Required:

a$.$ Determine an estimated return $($ATIRRe$)$ for a limited partner. $($Hint: Consider all $35$ limited partners as a single investor.$)$

b$.$ Determine an estimated return $($ATIRRe$)$ for the general partner.