An investor is considering the purchase of a small office building. The NOI is expected to be the following: year 1, $200,000; year 2, $210,000; year 3, $220,000; year 4, $230,000; year 5, $240,000. The property will be sold at the end of year 5 and the investor believes that the property value should have appreciated at a rate of 3% per year during the five-year period. The investor plans to pay all cash for the property and wants to earn a 10% return compounded annually.

a. What should be the present value of the property today? b. Based on your calculations in (a) what should be the property value at the end of year 5? c. How can the value at the end of year 5 be estimated if todays present value also must be estimated? d. Based on your answer in (a), if this office building could be reproduced for $2,300,000 today, what would be the underlying value of the land?