You are presented with the opportunity to buy a flat close to the NWU's Potchefstroom campus, with the intention to lease the flat to students. The opportunity is presented as a "package deal by an estate and property management agent with details of the transaction as follows: Purchase price: R850,000 You will finance the transaction with a bond. Bond and property registration fees (legal fees required to register you as the owner of the property) are estimated at R17,500. Currently, similar flats within the area are leased by the agent to students at R7,000 per month with an annual increase in the rent of 8% from the second year onwards. Levies, management fees payable and maintenance is no more than R1,750 per month in total. The inflation on these expenses will be 7% per year from the second year onwards. You mentioned to the estate agent that you intend to sell flat at the end of three years. She indicated that, based on her experience, you will able to sell the flat at that stage for R1.1 million, less her estates agents commission of 7% on the selling price. From the above, you decided to do some further enquiry into the opportunity and established that you will be able to buy the flat without making use of the specific estate and property management agent. In such an event, the details of the transaction remain the same except for the following: You will able to lease the flat to students at R6,750 per month (the estate agent is better than you at marketing the flat). Annual increases remain the same. As no management fees will be paid to the agent (you can manage the one flat on your own), the cost relating to levies and maintenance will be R1,250 per month. The inflation rate remains the same. You will able to sell the flat at the same price, making use of another agent who charges estates agent commission of 5% on the sales price. You require a return of 14% on your investment in order to repay your loan and meet your own investment goals. You may ignore the effect of taxes. REQUIRED: MARKS 17.5 Considering both alternatives and by making use of the Net Present Value (NPV) and Internal Rate of Return (IRR) methods, recommend whether you would invest in buying the flat using either of the options provided. You answer need to include a summary of both options with the variables, NPV and IRR displayed and properly described