You are considering the purchase of another office building close to your existing office building. The building is a 10- year old structure with an estimated remaining service life of 20 years. The tenants have recently signed long-term leases, which leads you to believe that the current rental income of $180.000 per year will remain constant for the first five years. Then the rental income will increase by 20% for every five-year interval over the remaining asset life. Thus, the annual rental income would be $216,000 for years 6 through 10, $259,200 for years 11 through 15, and $311,040 for years 16 through 20. You estimate that operating expenses will be $35,000 for the first year and that they will increase by $8,000 each year thereafter. You estimate that completely destroying the building and selling the lot on which it stands will realize a net amount of $200,000 at the end of the 20th year. If you had the opportunity to invest your money elsewhere and thereby earn interest at the rate of 10% per year, what would be the maximum amount (approximately) you would be willing to pay for the building at the present time? O A $1,765,417 O B. $1,029.239 OC $1,140,291 OD. $850,000 QUESTION 2 Answer questions 2 to 4 with the following information: A bi-level mall is under construction. Installation of only 10 escalators is planned at the start although the ultimate design calls for 16. The question arises whether to provide necessary facilities that would permit the installation of the additional escalators (eg, stair supports, wiring conduits, and motor foundations) at the mere cost of their purchase and installation now or to defer investment in these facilities until the escalators need to be installed. The two options are detailed as follows: Option 1: Provide these facilities now for all six future escalators at $250,000 Option 2. Defer the investment as needed. Installation of two more escalators is planned in three years, two more in