A parcel of real estate is zoned commercial but is improved with a residence. The sales data shows the following current values and trends:

Description

Residential - $45,000 (Year 0) - increasing at $450 per year

Commercial - $250,000 (Year 0) - increasing at $12,500 per year

Residential Improved Property Value - $300,000 (Year 0) - increasing at $3,000 per year

Assuming that is is Year 0 now, when will the highest and best use shift to commercial land? Use straight-line calculations. The demolition cost is $1,000.

Question options:

A. At the end of Year 4

B. At the end of Year 7

C. At the end of Year 6

D. At the end of Year 5