A 250,000-SF space is expected to rent in 10-year fixed-rent leases, successively in perpetuity. You expect the first lease will be signed one year from now. The second lease begins 10 years later, the third 10 years later, and so on. The rent is constant within each lease but changes to the market rate between new lease signings. The rent is expected to grow at a rate of 1% per year. The rent of the first lease is $15/sqft per year. All annual rent payments are due in advanced.

1.) What is the total annual rent expected for the first year?

2.)What is the PV of the first lease contract as of the time of its signing; use the intra-lease discount of 6%.

3.)What is the expected rental rate for the third lease contract?

4.) If the inter-lease discount is 10%, what is the present value (i.e., market price) of the commercial real estate structure? Hint: let N in the geometric sum formula approach infinity (S=a(1-d^N)/(1-d)).