SHOW WORK IN EXCEL

A building owner is evaluating the following alternatives for leasing space in an office building for the next 5 years: Net lease with steps. Rent will be $15 per square foot the first year and with step-ups of $1.50 per square foot each year until the end of the lease. All operating expenses will be paid by the tenant. Net lease with CPI adjustments. The rent will be $16 per square foot the first year. After the first year, the rent will be increased by the amount of any increase in the CPI. The CPI is expected to increase 3 percent per year. Calculate the effective rent to the owner for each lease alternative using an 8 percent discount rate.