You are considering the purchase of an apartment complex.

$$ Purchase price: $$775,000$

$$ Holding period is four years

$$ Cap rate is expected to be $7\%$ in year $4$

$$ Selling expenses will be $5\%$ of the sale price

$$ The $4-$year Treasury bill rate is $3\%$ and your risk premium for this project is $8\%$

Year

NOI

$1$

$$103,085$

$2$

$$108,361$

$3$

$$113,875$

$4$

$$119,636$

$5$

$$125,651$ a$)$ Calculate the NPV of this project assuming that you do not take any mortgages

b$)$ You take a $$620,000$ mortgage. Your annual debt payment is $$54,593.$ The outstanding loan balance at the end of year $4$ is $$596,558.$ Calculate the NPV of this project.