You are considering the purchase of an apartment complex.

• Purchase price: $775,000

•BTCF:

Year	NOI
1	$103,085
2	$108,361
3	$113,875
4	$119,636
5	$125,651

•Holding period is four years

•Cap rate is expected to be 7% in year 4

•Selling expenses will be 5% of the sale price

•The 4-year Treasury bill rate is 3% and your risk premium for this project is 8%

a) Calculate the NPV of this project assuming that you do not take any mortgages

b) You take a $620,000 mortgage. Your annual debt payment is $54,593. The outstanding loan balance at the end of year 4 is $596,558. Calculate the NPV of this project.