THE NEXT TWO (2) QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION: A tenant has just leased 25,000 square feet of industrial space at an annual contract (market) rent of $5.00 per square foot for a lease term of 30 years. The tenant wants to complete the interior of the space, at a cost of $230,000, by installing the necessary improvements. These tenant improvements will increase the market rental value of the space to $5.50 per square foot per year. A lender considers making a loan at 5% per annum, compounded semi-annually, with monthly payments, and amortized over 25 years with a term 5 years. The lender requires a 15% debt service safety margin, and will not advance more than 70% of the cost of the leasehold improvements. 5. The annual amount of potential profit rent is: (1) $7,500 (2) $12,500 (3) $15,000 (4) $5,000 6. Calculate the maximum mortgage loan secured by the leasehold improvements, rounded to the nearest $100. (1) $152,200 (2) $230,000 (3) $175,000 (4) $179,100