Problem
Suppose an investor is interested in purchasing the following income producing property at a current market price of $1,750,000. The prospective buyer has estimated the expected cash flows over the next four years to be as follows: Year 1 = $145,000, Year 2 = $165,000, Year 3 = $185,000, Year 4 = $200,000. Assuming that the required rate of return is 11% and the estimated proceeds from selling the property at the end of year four is $1,900,000, what is the NPV of the project?