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5 , 0 0 0 sf single tenant office building that is currently leased for $ 9 . 0 0 per sf per year with

5,000 sf single tenant office building that is currently leased for $9.00 per sf per year with three years remaining on the lease. The current lease is assignable. Typical total vacancy/credit loss for this type of property is 10%
per year. Owner expenses are typically found to be 25% of the effective gross
income. Market rent rates are $12.00 per sf per year. Market overall rates are 9.5%.
In the data collection, a sale of a leased interest was sold for $29,000 with a net
leasehold income of $12,000 per year with three years remaining.
What is he discount rate applicable to the leasehold estate?
A)11.64%
B)9.5%
C)12.36%
D)13.79%

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