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1) You own an office building that is currently vacant but are entertaining offers from two different potential tenants for a 5-year term. One offer
1) You own an office building that is currently vacant but are entertaining offers from two different potential tenants for a 5-year term. One offer is a 5-year lease starting with rent of $125,000 next year and will increase at 4% per year. The other potential tenant prefers a fixed lease payment that will not increase over the 5-year lease. What is the minimum fixed annual rental payment you would accept for a five-year agreement? Use a discount rate of 10%. 2) Bonnie has been saving for retirement for the last 25 years. Over that period, she deposited $500 per month in a high yield account and $300 per month in a lower risk, lower yield account. The return of the high yield account was 10 percent, and the lower yield account returned 5 percent. Now, on the day of her retirement, she will transfer all of her savings into an account with a return of 3 percent. All interest rates are compounded monthly. How much can she withdraw each month from her account assuming a 20-year withdrawal period
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