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:

Which would be the highest and best use of this site?

A. Office and retail are equally good options

B. Office

C. The residual land value is negative for both projects

D. Retail

Referring to the same scenario, what is the most that Acme Investors should be willing to pay for the land?

A. $3,700,500

B. $2,000,100

C. $2,909,091

D. $4,400,000

Rentable square feet Rents per square foot Operating expense ratio Average growth in NOI per annum Required return (r) \begin{tabular}{cc} Office & \multicolumn{1}{l}{ Retail } \\ 100,000 & 80,000 \\ $24.00 & $30.00 \\ 40% & 50% \\ 3% & 3% \\ 13% & 14% \\ $100 & $100 \end{tabular}