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Effective RentThis project requires you to compute the effective rent per square foot for a seven - year lease of office space. Assume a discount

Effective RentThis project requires you to compute the effective rent per square foot for a seven-year lease of office space. Assume a discount rate of 7 percent. In your report, describe which rent type should be chosen to maximize the price per square foot and which should be chosen to minimize the price per square foot.A) Gross Lease with Flat RentRent will be $35.00 per rentable square foot each year. The lessor (owner) will be responsible for the payment of all operating expenses. Expenses are estimated to be $10.00 during the first year and will increase by $1.00 per year thereafter. Apply the Excel NPV and PMT functions to calculate the present value and effective net rent per square foot, respectively. (12 Points)B) Gross Lease with Expense StopRent will be $33.00 per rentable square foot per year with the lessor responsible for payment of recoverable operating expenses as identified in the lease, up to an expense stop of $10.00 per square foot. Lessee pays all expenses in excess of $10.00 per square foot. Expenses are estimated to be $10.00 during the first year and will increase by $1.50 per year thereafter. Apply the Excel NPV and PMT functions to calculate the present value and effective net rent per square foot, respectively. (12 Points)C) Gross Lease with 1 Year Rent FreeRent during the first year is free. Thereafter, rent will be $44.00 per rentable square foot each year. The lessor (owner) will be responsible for the payment of all operating expenses. Expenses are estimated to be $10.00 during the first year and will increase by $1.00 per year thereafter. Apply the Excel NPV and PMT functions to calculate the present value and effective net rent per square foot, respectively. (12 Points)D) Gross Lease with 6 Months Rent Free and StepsRent will be $30.00 per rentable square foot the first year and will increase by $5 per year. Rent during the first 6 months is free. The lessor (owner) will be responsible for the payment of all operating expenses. Expenses are estimated to be $12.00 during the first year and will increase by $2.00 per year thereafter. Apply the Excel NPV and PMT functions to calculate the present value and effective net rent per square foot, respectively. (12 Points)E) Gross Lease with Step Up RentsRent will be $15.00 per rentable square foot in year 1 and will increase by $10.00 per square foot each year thereafter. Operating expense will be $9.00 per square foot in year 1 and will increase by $0.50 per year. Apply the Excel NPV and PMT functions to calculate the present value and effective net rent per square foot, respectively. (12 Points)F) Gross Lease with Step Up Rents and Expense StopRents will be $25.00 per square foot and will increase by $3 per year. Operating expenses will be $10.00 and will increase by $1.00 per year. The tenant will pay (the owner will recover) all increases in operating expense above a $10.00 expense stop. Apply the Excel NPV and PMT functions to calculate the present value and effective net rent per square foot, respectively. (12 Points)G) Gross Lease with Expense Stop and CPI AdjustmentRent will be $25.00 per rentable square foot the first year and will increase by the CPI after the first year with an expense stop at $10.00 per square foot. The CPI is estimated to be 8% each year. Operating expenses are assumed to be $2 per square foot in year 1 and will increase by $3 per year thereafter. Apply the Excel NPV and PMT functions to calculate the present value and effective net rent per square foot, respectively. (12 Points)Note: An expense stop implies that the owner will recover the amount above the expense stop. For example, if an expense stop of $15 exists and the operating expense is $20, then the recovery is $5.Formula: Net rent = Gross rent Operating expenses + Recoveries A) Gross Lease with Flat Rent
Year 1234567
Gross Rent
Operating Expenses
Recoveries
Net Rent
Present Value
Effective Net Rent
B) Gross Lease with Expense Stop
Year 1234567
Gross Rent
Operating Expenses
Recoveries
Net Rent
Present Value
Effective Net Rent
C) Gross Lease with 1 Year Rent Free
Year 1234567
Gross Rent
Operating Expenses
Recoveries
Net Rent
Present Value
Effective Net Rent
D) Gross Lease with 6 Months Rent Free and Steps
Year 1234567
Gross Rent
Operating Expenses
Recoveries
Net Rent
Present Value
Effective Net Rent
uuE) Gross Lease with Step Up Rent
use Year 1234567
Gross Rent
Operating Expenses
Recoveries
Net Rent

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