You are contemplating an industrial investment that costs $$25$M with a year$-$one cap rate of $5\mathrm{.}5\%($based on NOl$)$ and expects an NOI growth rate of $3\%$ per year. Your exit cap rate is $6\%($assume a $10-$year hold period$).$ Assuming there are no capital improvements and selling expenses, create a $10-$year proforma for unleveraged, leveraged and equity after$-$tax cash flows. The appropriate tax rates are $29\mathrm{.}6\%$ on annual operations, $15\%$ for capital gains, and $25\%$ for depreciation recapture. Also, assume depreciation of $40$ years.

Assume mortgage financing of $75\%$ of the property price with a $4\%$ interest$-$only loan and land that is worth $20\%$ of the property value.

a$.$ Use the proforma to determine the unlevered IRR for the investment.

b$.$ Compute the leveraged IRR for the investment.

c$.$ Compute the equity after$-$tax IRR for the investment.