A retail lease for 10,000 square feet of rentable space is being negotiated for a five-year term. The property owner believes that a 12 percent rate of return should be eamed annually on this real estate investment. Option A calls for a base rent of $36 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 are forcasted to increase by 6 percent at the end of each year thereafter. What is the present value of this lease (total, not per sq. ft.)? Hint: Don't forget to adjust the base rent for CAM recoverv. and note that rent and CAM grow over time. The PV per sq. ft. is $148.20. What is the effective rent per square foot for this lease? Option B calls for a lower base rent of $34 per square foot with the same step-ups and CAM charges, but the tenant must pay overage rents based on a percentage lease clause. The clause specifies that the tenant must pay 8 percent on gross sales over a breakpoint level of $900,000 per year. The owner belleves that the tenant's gross sales witl be $861,000 during the first year but should increase at a rate of 10 percent per year each year thereafter. What is the present value of the lease (total, not per sq. ft.)? Hint: Don't forget to adjust the base rent for CAM recovery \& sales overage, and note that rent, CAM, and sales grow over time. The PV per sq. ft. is $144.99. What is the effective rent per square foot for this lease? What is the effective rent per square foot for this lease if the sales are expected to increase by 20 percent per year