You are considering the purchase of an apartment complex. The following assumptions are made: The purchase price is $1,000,000. Potential gross income (PGI) for the first year of operations is projected to be $171,000. PGI is expected to increase 4 percent per year. No vacancies are expected. Operating expenses are estimated at 35 percent of effective gross income. Ignore capital expenditures. The market value of the investment is expected to increase 4 percent per year. Selling expenses will be 4 percent. The holding period is 4 years. The appropriate unlevered rate of return to discount projected NOIs and the projected NSP is 12 percent. The required levered rate of return is 14 percent. 70 percent of the acquisition price can be borrowed with a 30-year, monthly payment mortgage. Mortgage interest is compounded monthly. The annual interest rate on the mortgage will be 8.0 percent. Financing costs will equal 2 percent of the loan amount. There are no prepayment penalties.

(1) Calculate the levered required initial equity investment.

(2) Calculate the before-tax cash flow (BTCF) for each of the four years.

(3) Calculate the before-tax equity reversion (BTER) from the sale of the property.