You are considering the purchase of a real estate income property. The cost of the four-room apartment complex is $700,000. The projected annual net operating cash flows at the end of years 1-4 are $50,000, $53,000, $56,000 and 60,000, respectively. Additionally, at the end of year four it is projected that the property could be sold for $760,000 (after commissions). Should you make the purchase if you client demand a 9% internal rate of return and a positive NPV?

a.

Yes, the internal rate of return on this purchase is 9.62% and the NPV is $14,631

b.

No, the NPV is a positive $30,492 but the internal rate of return on this purchase is only 7.91%

c.

Yes, the internal rate of return on this purchase is 12.52% and the NPV is $44,651

d.

No, the internal rate of return on this purchase is only 7.91% and the NPV is negative.