You are working on cash flow projections for a 38,000-square-foot office building occupied by two tenants, A and B. The lease for tenant A, who occupies 26,000 square feet of space, expires in 5 years. You expect to receive the market rent in year 6, $42.00/sf, whether tenant A decides to renew or vacate. If tenant B will pay $40.00/sf to rent 12,000 square feet of space in year 6. Tenant A's lease expires in year 5, and you expect them to renew with a probability of .85. If they do not renew, you expect it will take about 6 months to find a new tenant for the space. The leases for both tenants are triple net; tenants pay property taxes, insurance, and maintenance. The owner is responsible for utilities and sewage. The expected annual cost for these services is $3.20/SF.

Step 1: What is the building's expected potential gross income for that year?

Step 2: What effective gross income do you expect to receive in year 6?

Step 3: What is the expected occupancy rate in year 6?

Step 4: What is the expected utility and sewage expense in year 6 if the expenses are 25% fixed?

Step 5: Given no other expenses, what is NOI for year 6 of ownership?

Step 6: What is the price you expect to receive for the building based on an 8% cap rate if you sell it in year 5?

Please answer all the steps as it incudes one question.