Acme Investors is considering the purchase of the undeveloped Baker Tract of land. It is currently zoned for agricultural use. If purchased, however, Acme must decide how to have the property rezoned for commercial use and then how to develop the site. Based on its market study, Acme has made estimates for the two uses that it deems possible, that is, office or retail. Based on its estimates, the land could be developed as follows:

	Office	Retail
Rentable square feet	100,000	80,000
Rents per square foot	$33.00	$41.25
Operating expense ratio	40%	50%
Average growth in NOI per annum	3%	3%
Required return (r)	13%	14%
Total construction cost per square foot	$109	$109

What would be the residual value of the land if the office building was developed?