5. A property produces a first-year net operating income of $24,000. Because of the long economic life of the building, the income is considered as a perpetuity that will grow by 2.5% per year using a discount rate of 9.5%, the property value is estimated at (A) $276,968 (B) $252,632 (C) $200,000 (D) $342,857 6. A property is leased for $24,000 per year although market rents are currently $27,500 per year and are expected to increase by 2% per year. The property is expected to be sold at the end of year 10 based on a 10% terminal cap rate applied to the eleventh year NOI The current lease on the property will expire at the end of year 10 so the property can be leased in the eleventh year at market rates. What is the value of the leased fee estate based on an 11.5% discount rate? (A) $362,489 (B) $298,325 (C) $251,298 (D) $271,486 7. The discount rate is a rate that a typical investor would normally require as a(n) return over investment holding period. (A) Maximum (B) Risk free (C) Expected (D) Historical