1. What should be the present value of the property today?
2. What should be the property value (REV) at the end of year 5 in order for the investor to earn the 10% IRR?
3. Based on your answer in (b), if the building could be reproduced for $2,320,000 today, what would be the underlying value of the land?

2. An investor is considering the purchase of a small office building. The NOI is expected to be the following: Year 1, \$202,000; Year 2, \$212,000; Year 3, \$222,000; Year 4, \$232,000; Year 5, \$242,000. The property will be sold at the end of year 5 and the investor believes that the property value should have appreciated at a rate of 3 percent per year during the five-year period. The investor plans to pay all cash for the property and wants to earn a 10 percent retum on investment (IRR) compounded annually. Required: a. What should be the present value of the property today? b. What should be the property value (REV) at the end of year 5 in order for the investor fo earn the 10% IRR? c. Based on your answer in (b), if the building could be reproduced for $2,320,000 today, what would be the underlying value of the land