You have the opportunity to purchase a triplex rental property. You expect this property

to generate $$108,000$ in rent one year from now and for rent to increase at $4\%$ per year for the

following four years. Five years from now, you believe you will be able to sell the property for

$$750,000.$ Assume the interest rate is $7\%$ per year.

a$.$ How much should you be willing to pay today for this property? $($Note: you should be willing to

pay the present value of the cash flows you will receive$).$

b$.$ If you can buy the property for $$1,000,000$ what is the NPV of this opportunity?