A building owner charges net rent of $20 in the first year, $21 in the second year, and $22 in the third year. The tenant and landlord agreed to a rent reduction as follows: the tenant will receive free rent equal to 6 months of the year 1 rent. However, the rent credit (i.e the rent reduction) while calculated based on amount of year 1 rent, will only be applied to the rent payable in year 3. The tenant will need to pay the full year 1 and year 2 rents, and in year 3 have 8 months of free rent but calculated using the year 1 rent.

A) What is the actual calculated $ amount of the rent credit?

B) Using a 10 percent discount rate, what is the NPV of the total amount of the rent paid over the 3 years?

C) Using a 10 percent discount rate, what is the effective rent payment per year?