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A property owner is evaluating the following alternatives for leasing space in his office building for the next five years: Gross lease. Rent will be
A property owner is evaluating the following alternatives for leasing space in his office building for the next five years:
Gross lease. Rent will be $30 per square foot each year 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 thereafter. Gross lease with expense srop and CPI adjustment Rent will be $22 the fist year and increase by the full amount of any change in the CPI after the first year with an expense stop at $9 per square foot. The CPl and operating expenses are assumed to change by the same amount as outhned above. a. Calculate the effective rent to the owner (after expenses) for each lease altemative using a 10 percent ciscount (fre. Required: b. How would you rank the alternatives in terms of risk to the property owner Step by Step Solution
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