1. You are asked to appraise a vacant parcel of land.Your analysis shows that if apartments were constructed, the portion of the NOI attributable to the land would be $30,000 per year.If offices were constructed, the portion attributable to land would be $25,000, and the portion contributed by a small neighborhood shopping center would be $27,500.All of these uses would be legal.If the appropriateR_Lis 0.105, what is the value of the site for each use and what should be built?

Answer: $285,714 apartments are best use

For the question above, a fourth use of the property is determined by the owners that would yield an effective NOI of $40,000 per year.A nearby property owner discovers that the land owner is considering this alternative use and writes a letter, receiving the answer on the "Additional Info for Best Use Problem."

1. Assuming that there are no legal restrictions to the higher value use of the land (e.g., no residences or schools within local ordinance limitations, etc.), how much legal expense would the land owner be willing to bear to receive the higher value income ($40,000) instead of the next best use ($30,000) for the next 10 years (assume a 12% discount rate)?