A real estate developer and operator plans to build a new high-rise office building in North Dallas. Comparable buildings last 60 years, but the developer plans to sell it after 20 years for 40% of the construction cost. For the first 20 years it can be leased as Class A office space. When the building is sold, then the land's cost will be recovered in full (land value is estimated to go up 3% per year). Here are the estimated cost: $22M Land $41M Building (500,000 square foot) $6.4M Annual operating and maintenance - payed at the end of year 4% Annual property tax and insurance (% of initial investment) - payed at the end of each year (a) If the company wants a 12% rate of return, what is the required annual leasing income for the whole building? Use the method of annual cash flow and then the method of NPW to find the solution. (b) Assuming an expected average occupancy rate of 90% (i.e., on average 10% of the building are vacant at all times), what is the minimum leasing price per square foot and year? Is this a reasonable price