Your are considering the purchase of small apartment complex. The following assumptions are made:

$.$

The purchase price $

$1$

$$million

$.$

Potential gross income PGI for the first year of operation is projected to be $

$1$

$7$

$1$

$,$

$0$

$0$

$0$

$.$

$.$

No vancancies are expected.

$.$

Operating expenses are estimated at

$3$

$5$

$$percent of effective gross income. Ignore capital expenditures.

$.$

The market value of the investment is expected to increase to $

$1$

$,$

$1$

$6$

$9$

$,$

$8$

$5$

$9$

$$at the end of

$5$

$$years$.$

$.$

Selling expenses will be

$4$

$$percent$.$

$.$

The holding period is

$5$

$$years

$.$

The appropriate unlevered rate of return to discount projected NOIs and the projected NSP is

$1$

$2$

$$perecent$.$

$.$

The required levered rate of return is

$1$

$4$

$$perecent

$.$

$7$

$0$

$$percent of the acquisition price can be borrowed with a

$3$

$0$

$$year$,$ monthly pyament mortgage.

$.$

The annual interest rate on the mortgage will be

$8$

$$percent$.$

$.$

Financing costs will equal

$2$

$$percent of the loan amount.

$.$

There are no prepayment penalties.

calculate the net present value of this investment, assuming no mortgage debt.

calculate the unelvered internal rate of return of this investment, assuming no debt.