You are considering purchasing a rental property from your cousin, Billy. You are trying to assess how much you should pay for it. He is asking $2 million, and you think this seems high. You have estimated the property will have the following:

Rent: $50,000 paid today;

each year rent will grow by 5%

Sale of building at the end of 10 years (net of fees and taxes): $2.5 million

Your required cost of capital is 8.5%.

Should you pay $2million for this opportunity? What is its NPV if you do?