You are preparing a five year proforma for ACME Apartment Realty Fund. The fund has the following data:

$100 million in total assets

with 65% debt at 6% interest only

risk-free rate of 3.5%

ownership split of 75%/25%

preferred return of 10%

inflation of 3%

portfolio valued at a 6.5% capitalization rate

What is the preferred return projected to be paid in year two of the proforma?

a. $2795000

b. $1050000

c. $2280000

d. $2100000