You are considering purchasing a property that you forecast will have the following NOI for years 1-5. (You have included all expenses in your NOI calculation, so your Cash Flow before Financing is equal to your NOI.) You believe NOI will grow at 2% per year after year 5. If you are seeking an 11% IRR. Conduct your analysis over 5 years and use a going out cap rate of 9%.

		Year		1	2	3	4	5
		NOI		350,000	360,500	370,000	385,000	395,000
a.	What would your purchase price need to be to achieve your desired 11% return?
b.	How much of the property value is derived from the operating cash flows rather than the reversion?