Conference Services Inc. has leased a large office building for $$4$ million per year. The building is larger than the company needs: two of the building$$s eight stories are almost empty. A manager wants to expand one of her projects, but this will require using one of the empty floors. In calculating the net present value of the proposed expansion, senior management allocates one eighth of $$4$ million of building rental costs $($i$.$e$.,$ $$5$ million$)$ to the project expansion, reasoning that the project will use one$-$eighth of the building$$s capacity.

a$.$ Is this a reasonable procedure for the purpose of calculating NPV$?$

b$.$ Suggest a better way to assess the cost of the office space used by the project.