You are considering the acquisition of a small office building. The owner is selling it for Sh. 1 million. The expected before-tax cash flows from operations-assuming a 5-year holding periodare as follows:

Year BTCF

148,492

253,768

359,282

465,043

571,058

The before-tax cash flow from the sale of the property at the end of year five is expected to be Sh. 295,050.

Required

i) Calculate the property value, assuming a 12% required rate of return. (9 marks)

ii) Should the property be purchased? (3 marks)