We considering purchasing a small condo in the US to use as a summer vacation. The property has an initial investment of 155,000 and provides a cash flow of 20,000 per year for the first 5 years. We would sell the property at the end of year 5 and the estimate we would receive 175,000.

1. If we finance the property with 80% equity at a 7.0% effective cost. What is the before-tax IRRon the equity invested?

2. What is the before-tax IRR on this investment?