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:

Rentable square feet

Rents per square foot

Operating expense ratio

Avg. growth in NO$/$ per annum

Required return $($r$)$

Total construction cost per square foot

Office

$100\mathrm{.}000$

$$24\mathrm{.}00$

$40\%$

$3\%$

$13\%$

$$100$

Retail

$80\mathrm{.}000$

$$30\mathrm{.}00$

$50\%$

$3\%$

$14\%$

$$100$ What would be the implied land value for each use? What would be the highest and best use of this site?