Use the term and reversion method to calculate the price you should pay for the following property:

A commerical property subject to a $10$ year lease producing a passing income of $$500,000$ pa on a net basis.

The current annual rental income is fixed for $3$ years $($the next rent review is to market and is in three years time$).$

Current open market rental would produce an income of $$600,000$ net pa for the property.

The market capitalisation rate that should be applied to the net cash flow of the property is $6\%.$

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