You re entertaining purchasing 543 Blue Ridge Drive, a three-tenant warehouse containing a total of 8,200 square feet of space. The property is listed for $585,000. The building was built in phases. Suite A is 4,200 square feet and is situated in the oldest portion of the building. You estimate you could rent it out for $7.50 per square foot. Suites B and C are 2,000 square feet each. Suite B could fetch $7.75 per square foot, and Suite C could rent for $7.75 per square foot. Vacancy rates in the market have averaged about 6.00% over the last few years. The property is assessed at $526,500 by the local municipality with a tax rate of $0.75 per $100 in assessed value. You expect insurance to cost about $0.35 per square foot. Tenants will be responsible for the maintenance of their suites, but you expect to spend another $0.35 per square foot on common area maintenance. Tenants are responsible for utilities and janitorial. Property management fees for this type of property are 4.00% of effective gross income. You plan to retain a reserve for replacement of $0.25 per square foot per year. You expect rents to increase by 2.50% per year and expenses to increase by 2.00% per year (excluding your reserve). Please answer the ten questions below based on the following assumptions: Holding Period 7 Years Terminal Capitalization Rate 8.00% Cost to Sell 5.00% Discount Rate 9.00% What is the EGI in year 1? What is the NOI in year 1? What cap rate does the year 1 NOI imply based on the list price for the property? What is the PGI in year 3? What are your total expenses in year 4 What is your NOI in year 7? What is the anticipated sale price of the property at the end of the holding period assuming the terminal capitalization rate? If closing costs are typically about 5% of the sale price for a seller, what are your expected net proceeds from the sale? What is the maximum you could pay for this property while still meeting your required discount rate? What is your projected internal rate of return (IRR), assuming you purchase the property for its list price? (Answer these with excel formulas)