You are an employee of University Consultants, Limited, and have been given the following assignment. You are to present an investment analysis of a small retail income-producing property for sale to a potential investor. The asking price for the property is $1,250,000; rents are estimated at $160,000 during the first year and are expected to grow at 2.5% per year thereafter. Vacancies and collection losses are expected to be 10% of rents. Operating expenses will be 35% of effective gross income. A fully amortizing 70% loan can be obtained at 8% interest for 30 years (total annual payments will be monthly payments x 12). The property is expected to appreciate in value at 3% per year and is expected to be owned for five years and then sold.

please answer the following questions and show steps:

a. What is the first-year debt coverage ratio?

b. What is the terminal capitalization rate?

c. What is the investor's expected before-tax internal rate of return on equity invested (BTIRR)?

d. What is the NPV using 14 percent discount rate?