Page $5$ describes the cash flows. The property is advertised at CapRate $=7\%.$

Verify that this is the case. Calculate the cap rate embedded in the asking price.

NOTE: This is a $75-$year ground lease, not ultimate ownership. We learned that cap rate assumes perpetuity. In this case, let us assume that this is a perpetuity for this specific question. As we will see below, the terminal value has little value anyway.

Group of answer choices

$7\mathrm{.}0005\%$

$7\mathrm{.}0000\%$

$6\mathrm{.}9995\%$

$6\mathrm{.}9992\%$

$7\mathrm{.}0009\%$