1. An investor is considering the acquisition of a “distressed property” available for $200,000. The investor can obtain a loan amount of $160,000 at 4.5 percent interest and that the property requires $2525 additional monthly expenditures covering renovation, interests, insurance, etc. during the next year. Assume $8,000 selling expenses. a. How much should the investor must sell the property for after one year in order to earn a 20 percent return (IRR) on equity? b. In case the property does not sell, the investor may have to carry the property for one additional year. He believes that he could rent it (starting in year 2) and realize a net cash flow before debt service of $1,200 per month. However, he would have to make an additional $600 monthly payments covering interest costs on his loan during that time, and then sell. What would the price have to be at the end of year 2 in order to earn a 20 percent IRR on equity?