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A landlord has offered a tenant a 10-year lease with annual net rental payments of R30/m2in arrears. The appropriate discount rate is 8%. The tenant

A landlord has offered a tenant a 10-year lease with annual net rental payments of R30/m2in arrears. The appropriate discount rate is 8%. The tenant has asked the landlord to come back with another proposal, similar in every way except with rent that steps up annually at a rate of 3% per year, in return for a lower starting rent. What shouldthe landlord's proposed startingrent be?

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