A friend has asked for your help in determining whether she should invest in a property. She tells you that the property will have annual cash flows of $2,000 during the first two years and will increase by $200 every two years. She plans to keep the property during eight years and then sell it at an expected price of $60,000. She has an annual discount rate of 8% and the current market price for the property is $50,000. Should your friend invest in this property? Calculate the NPV of this investment opportunity. Which should be the required discount rate to start investing in this property?

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