A property owner is evaluating the following altematives for leasing spoce in his office building for the next five years: Not lease with steps. Rent will be $15 per square foot the first year and will increase by $2.40 per square foot each year until the end of the lease. All operating expenses will be paid by the tenant. Net lease with CPV adjustments. The rent wili be $17 per square foot the first yoar. After the first year, the rent will be increased by the amount of any increase in the CPL. The CPI is expected to inciease 5 percent per year. Gross lease. Rent will be $33 per square foot each yeat with the lessor responsible for payment of all operating expenses. Expenses are estimated to be $9 during the first year and increase by $1 per year thereatter. Gross lease with expense stop and CPl adjustment. Rent will be $23 the first year and increase by the full amount of any change in the CPl after the first year with an expense stop at $9 per square foot. The CPI and operating expenses are assumed to change by the same amount as outined above. Required: a. Calculate the effective rent to the owner (after expenses) for each lease aitemative using a 11 percent discount rate. b. How would you rank the altematives in terms of risk to the property owner? Complete this question by entering your answers in the tabs below. Calculate the effective rent to the owner (after expenses) for each lease alternative using a 11 percent discount rate. Notet Do not round your intermediate calculations. Round your final answers to two decimal places. GIUSS Tease with expense stop and CPI adjustment. Rent will be $23 the first year and increase by the full amount of any cha CPI after the first year with an expense stop at $9 per square foot. The CPI and operating expenses are assumed to change same amount as outlined above. Required: a. Calculate the effective rent to the owner (after expenses) for each lease alternative using a 11 percent discount rate. b. How would you rank the alternatives in terms of risk to the property owner? Complete this question by entering your answers in the tabs below. How would you rank the alternatives in terms of risk to the property owner? Note: Rank the alternatives from the least risky to the most risky. A property owner is evaluating the following altematives for leasing spoce in his office building for the next five years: Not lease with steps. Rent will be $15 per square foot the first year and will increase by $2.40 per square foot each year until the end of the lease. All operating expenses will be paid by the tenant. Net lease with CPV adjustments. The rent wili be $17 per square foot the first yoar. After the first year, the rent will be increased by the amount of any increase in the CPL. The CPI is expected to inciease 5 percent per year. Gross lease. Rent will be $33 per square foot each yeat with the lessor responsible for payment of all operating expenses. Expenses are estimated to be $9 during the first year and increase by $1 per year thereatter. Gross lease with expense stop and CPl adjustment. Rent will be $23 the first year and increase by the full amount of any change in the CPl after the first year with an expense stop at $9 per square foot. The CPI and operating expenses are assumed to change by the same amount as outined above. Required: a. Calculate the effective rent to the owner (after expenses) for each lease aitemative using a 11 percent discount rate. b. How would you rank the altematives in terms of risk to the property owner? Complete this question by entering your answers in the tabs below. Calculate the effective rent to the owner (after expenses) for each lease alternative using a 11 percent discount rate. Notet Do not round your intermediate calculations. Round your final answers to two decimal places. GIUSS Tease with expense stop and CPI adjustment. Rent will be $23 the first year and increase by the full amount of any cha CPI after the first year with an expense stop at $9 per square foot. The CPI and operating expenses are assumed to change same amount as outlined above. Required: a. Calculate the effective rent to the owner (after expenses) for each lease alternative using a 11 percent discount rate. b. How would you rank the alternatives in terms of risk to the property owner? Complete this question by entering your answers in the tabs below. How would you rank the alternatives in terms of risk to the property owner? Note: Rank the alternatives from the least risky to the most risky
