You are advising a group of investors who are considering the purchase of a shopping center

complex. They would like to finance $75\%$ of the purchase price. A loan has been offered to

them on the following terms. The contract interest rate is $10\%$ and will be amortized with

monthly payments over $25$ years. The loan also will have an equity participation of $40\%$ of the

cash flow after debt service. The loan has a lockout provision that prevents it from being

prepaid before year $5.$

The property is expected to cost $$5$ million. NOI is estimated to be $$475,000,$ including

overages, during the first year, and to increase at the rate of $3\%$ per year for the next five years.

The property is expected to be worth $$6$ million at the end of five years. The improvements

represent $80\%$ of cost$,$ and depreciation will be move $39$ years. Assume a $28\%$ tax bracket for all

income and capital gains and a holding period of five years.

Compute the BTIRR after$\_$ five years, taking into account the equity participation $($in decimals,

rounded$\_$to three digits$)$:

What would be the BEIR on the project in question $4($in decimals, rounded to three digits$)?$