A retail lease for $10,000$ square feet of rentable space is being negotiated for a five$-$year term.Option A calls for a base rent of $$25$ per square foot for the coming year with step$-$ups of $$1$per year each year thereafter. CAM charges are expected to be $$3$ for the coming year and areforecasted to increase by $6$ percent at the end of each year thereafter.Option B calls for a lower base rent of $$23$ per square foot with the same step$-$ups and CAMcharges, but the tenant must pay overage rents based on a percentage lease clause. The clausespecifies that the tenant must pay $8$ percent on gross sales over a breakpoint level of $$900,000$per year. The owner believes that the tenants gross sales will be $$850,000$ during the first year but should increase at a rate of $10$ percent per year each year thereafter.

a$)$ If the property owner believes that a $12$ percent rate of return should be earned annually onthis real estate investment, which option is best?

b$.$ What if sales are expected to increase by $20$ percent per year?