Question
Based on the previous question asked: You own an office building that is currently vacant but are entertaining offers from two different potential tenants for
Based on the previous question asked: "You own an office building that is currently vacant but are entertaining offers from two different potential tenants for a 5-year term. One offer is a 5-year lease starting with rent of $125,000 next year and will increase at 4% per year. The other potential tenant prefers a fixed lease payment that will not increase over the 5-year lease. What is the minimum fixed annual rental payment you would accept for a five-year agreement? Use a discount rate of 10%."
Next Year Lease Payment (LP1) in the PV annuity growing formula, should it be the next payment in which you begin the contribution = 125000*(1+4%) = 130,000.00 Please explain.
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