$4.$ Ever eager to acquire more classroom and office space, the central administration for T MU finds a suitable development site for a new mixed$-$use office, classroom and retail building a mere fifteen kilometres from the intersection of Dundas and Yonge. They hire the Trump Corporation to develop their planned facility, which T MU will purchase outright upon its completion. On the basis of a holding period of five years, Eric, the primary partner, estimates that the building's annual effective gross income of $$4,000,000\mathrm{.}00$ in it's first year of use by T MU will rise steadily for two subsequent years at the annual rate of $4\%$ and that total annual operating expenses plus capex costs will, over this same period, rise by $2\%$ annually from a first year value of $$600,000\mathrm{.}00.$ Eric also forecasts that, beginning with their respective values in year three, effective gross income will rise in each of year four and five by $5\%$ whle annual operating expenses plus capex costs will remain stable at their third year values in both years four and five. This information is given to TMU's crack in$-$house staff of accountants, who also know that Ford and Tory Equity Partners, which is providing the equity financing for the project, requires a six percent annual return on its investment. Overwhelmed by the magnitude and complexity of this information, the accountants call you in to do the calculations appropriate for estimating the current value of the building upon completion.. Based on the extraordinary annual increase in TRSM tuition revenue, you estimate that the growth in the value of the annual net operating income from the building, after the fifth year of use, will be approximately the average annual growth rate over its first five years, over the indefinite future. Prior to your briefing the T MU President and Provost, the accountants instruct you to calculate:

a$.$ the annual net operating income $($NOI$)$ accruing to the building for each of its first five years of T MU ownership

b$.$ the estimated market value of the building in the last year of the holding period

c$.$ based on discounted cash flow valuation, the maximum value T MU should bid for the building today