You are a real estate mogul considering a three$-$year investment in

an office propenty project Your analysts have localed a property in

the city: You are provided with the following information:

You can buy the bullding today for $10$ million without borrowing.

The building's gross leasable area is $80,000$ square feel.

You anticlcale that the rarket rent will be $\frac{20}{?}$ sqft p$.$a$.$ in the

coming yeat, with renil growth of $3\%$ per year thereafter.

The office buildirg's vacancy allowance is $8\%$ of potert$$al gross

income.

Theoperating expenses will be $30\%$ or the nel gross income

You estimate that the going$-$out $($exit$)$ cap rate at the end of $3.$l$.$

year $($EOY$3)$ will be $5\%.$

The required rate of return $($discount rate$)$ is $15\%$ pa

Ignoto transaction cost.

$($a$)$ Given the table below. What is the net operating income of the

office building in eact year?