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You are evaluating two alternative five-year lease opportunities for 8,000 sf 2 office space. The first alternative has first-year rent of $18 per sf 2

You are evaluating two alternative five-year lease opportunities for 8,000 sf2 office space. The first alternative has first-year rent of $18 per sf2, and this will rise by $1.00 in each year thereafter. You will pay no expenses other than rent. The second alternative has first-year rent of $15 per sf2, which will increase by 3% per year in each year thereafter. The second alternative also requires you to pay a comman area charge of $2 per sf2 in year 1, which will increase by $0.16 in each year thereafter. Find the effective net rent for each of these alternatives, using a discount rate of 7%.

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