(PLEASE ANSWER WITH CELL REFRENCES)

Lin Land Ltd. (LLL) is considering investing in an apartment complex. The sale price is $450,000 and LLL expects to have positive fter-tax cash flows from rents of $20,000 for the next three years. At the end of the third year, LLL anticipates selling the apartment complex for net after-tax gain on sale of $500,000. If LLL's required return is 15%, should LLL go ahead and purchase the apartment complex? Finance Concept: The net present value rule states that accepting all projects that are worth more than they cost increases shareholder value. The decision rule is to accept all positive NPV projects. The internal rate of return on an investment is the rate that makes the NPV equal to zero. Numerical Solution: NPV = PV - required investment = PV cash flows - selling price = CF/(1+r) + CF2/(1+r)+ CF3/(1+r)' + ATGS/(1+r) - SP = 20,000/1.15 + 20,000/1.152 + 20,000/1.153 +500,000/1.153 - 450,000 = 17,391 +15,123 +13,150 + 328,758 - 450000 = -75,578; decision - do not accept the project Using Goal Seek: Let's find the required return that makes the NPV equal to zero. The cash flows are already entered for you from the inputs table. NPV & IRR Table: year cash flow 0 Inputs: Initial outlay CF ATGS 1 2 3 NPV IRR Enter =NPV(G31,D29:D31)+D28 Enter: EIRR(D28:D31)