You are trying to determine whether or not to upgrade your apartment building. You have determined that if you spend $300,000, you will increase your annual cash flow by 20% in Year 1 and grow 5% annually thereafter. The current cash flow is 100,000. The current value is $2,000,000.The upgraded building will be worth a 4.5% Cap Rate at the end of Year 5. You can take this money instead and buy something else that will yield you a 6% return.

What are the cash flows?

Year 1:

Year 2:

Year 3:

Year 4:

Year 5:

What is the NPV of this income stream?

on excel