Problem 1 ( 25 points): A tenant is looking at a 3,500 square foot space. They desire a threeyear lease. The Tenant Improvements (TI) are $10/sf, the lease commission is 6% of the entire potential rent stream, there is four months free rent and the rental rates are Yr1=$14/sf, Yrr2=$15/sf and Yr3=$16/sf. The Landlord's cost of capital is 11%. Unreimbursed operating expenses total $3,500 per year for the tenant space for the life of the lease. From the standpoint of the Landlord, what is the Net Effective Rent for this lease on a per square foot (psf) basis? To simplify things, you may assume that the rents are received annually instead of monthly and that the calculation is an "ordinary annuity" rather than an annuity due