2.

A building owner is evaluating the following alternatives for leasing space in an office building for the next five years: Net lease with CPI adjustments. The rent will be $20 /square foot the first year. After the first year, the rent will be increased by the amount of any increase in the CPI. The CPI is expected to increase by 3% per year for two years and then by 2% for the following last 2 years of the lease. If discount rate is 10%, what is the effective rent? (compute your answer using 4 decimals and round your final answer to 2 decimals)