An owner of the ATRIUM Tower Office Building is currently negotiating a five$-$year lease with ACME Consolidated

Corporation for $20,000$ rentable square feet of office space. ACME would like a base rent of $$20$ per square foot with step$-$

ups of $$1$ per year beginning one year from now.

Required:

a$.$ What is the present value of cash flows to ATRIUM under the above lease terms? $($Assume a $10$ percent discount rate.$)$

b$.$ The owner of ATRIUM believes that the base rent of $$20$ per square foot in $($a$)$ is too low and wants to raise that

amount to $$24$ with the same $$1$ step$-$ups. However, now ATRIUM would provide ACME a $$50,000$ moving allowance

and $$100,000$ in tenant improvements $($TIs$).$ What would be the net present value of this alternative to ATRIUM?

c$.$ ACME informs ATRIUM that it is willing to consider a $$23$ PSF with the $$1$ annual step$-$ups. However, under this

proposal, ACME would require ATRIUM to buyout the one year remaining on its existing lease in another building.

That lease is $$15$ per square foot for $20,000$ square feet per year. If ATRIUM buys out ACME's old lease, ACME will not

require a moving allowance or TIs. What would be the net present value of this proposal to ATRIUM?

Answer is not complete.

Complete this question by entering your answers in the tabs below.

What is the present value of cash flows to ATRIUM under the above lease terms? $($Assume a $10$ percent discount rate.$)$

Note: Do not round your intermediate calculations. Round your answer to $2$ decimal places.