Suppose that the warehouse income would grow at 3 percent per year instead of 2 percent. Does this change the highest and best use of the site? If so, what is the new implied land value?

Use Office Retail Apartment Warehouse Year 1 NO $500,000 600,000 405,000 400,000 (r -g) 13 .03 13 .05 .12-.03 10 .02 .10 .08 .09 .08 (a c = d) Implied Property Value (PVM $5,000,000 7,500,000 4,500,000 5,000,000 Construction Cost of Bldg. $4,000,000 6,750,000 3,000,000 4,000,000 Implied Land Value (Residual) $1,000,000 750,000 1,500,000 1,000,000