An owner of the Atrium Tower Office Building is currently negotiating a 5-year lease with ACME Corp. for 20,000 rentable square feet of office space. ACME would like a base rent of $20 per sq ft with step ups of $1 per year, beginning 1 year from now.

Assume a 10% discount rate.

what is the present value of the cash flows to Atrium under ACME's requested lease terms?

Group of answer choices

$77.38

$82.68

$74.12

$80.57

Atrium refuses the offer, arguing that $20 psf (per square foot) is too low. Instead, ACME offers $23 psf bas rent with $1 annual step ups. But, ACME also requires Atrium to buyout the one year remaining on its existing lease -- which is at $15 psf per year for the same space size.

From Atrium's perspective, what is the present value net of the upfront costs of this proposal?

Group of answer choices

$79.05

$75.57

$69.86

$71.45