I need help with number 2

BFIN 421 Fall 2021 Homework Assignment - Chapters 10 & 11 1. Village Property Group is considering the purchase of the Adams Garden Apartment project. Next year's net operating income (NOI) is expected to be $1.5 million, and the local rental market appears to be in balance. NOI is expected to increase at 4% annually, and Village Property Group believes it should earn a 14% return on its investment. a. What would the estimated value for the property be now? b. If the required return were 12%, what would the value of the property be? 2. Athena Investment Co. is considering the purchase of an office property. After a careful review of the market and leases that are in place, Athena believes that next year's cash flow will be $100,000. It also believes cash flow will rise by $7,000 each year for the foreseeable future. It plans to own the property for at least ten years. Based on a review of sales of properties that are now 10 years older than the subject property, Athena has determined that cap rates are in the range of .10. Athena believes that it should earn an IRR of at least 12%. a. What is the estimated value of the property, assuming a 10 terminal cap rate? b. What is the current, or "going in, cap rate for this property? C. What accounts for the difference between the cap rate in b and the terminal cap rate of 10? BFIN 421 Fall 2021 Homework Assignment - Chapters 10 & 11 1. Village Property Group is considering the purchase of the Adams Garden Apartment project. Next year's net operating income (NOI) is expected to be $1.5 million, and the local rental market appears to be in balance. NOI is expected to increase at 4% annually, and Village Property Group believes it should earn a 14% return on its investment. a. What would the estimated value for the property be now? b. If the required return were 12%, what would the value of the property be? 2. Athena Investment Co. is considering the purchase of an office property. After a careful review of the market and leases that are in place, Athena believes that next year's cash flow will be $100,000. It also believes cash flow will rise by $7,000 each year for the foreseeable future. It plans to own the property for at least ten years. Based on a review of sales of properties that are now 10 years older than the subject property, Athena has determined that cap rates are in the range of .10. Athena believes that it should earn an IRR of at least 12%. a. What is the estimated value of the property, assuming a 10 terminal cap rate? b. What is the current, or "going in, cap rate for this property? C. What accounts for the difference between the cap rate in b and the terminal cap rate of 10