Assume that you are the landlord of a strip mall with a Ross store. Specifically, Ross has
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Question:
There is also a Michaels store in the mall of the previous question. Michaels currently $600K NNN rent per year with no escalation. Michaels lease expires soon. Specifically, you expected to receive 600K for two years before the lease expires. There is 50% chance that Michaels will not renew its lease. If it renews the lease, the new lease will have a 8-year term and $600K NNN rent. If Michaels does not renew, the space will be empty for one year, after which a new lease with 7-year term and $600K NNN rent will be signed. Accounting for vacancy allowance, what are the expected cash flows for the next 10-years on the space that Michaels currently occupies?The discount rate for Michaels credit risk is 6%. What is the present value of all the expected cash flows in the next 10-years from the space that Michaels occupies?
Related Book For
College Accounting A Contemporary Approach
ISBN: 978-0077639730
3rd edition
Authors: David Haddock, John Price, Michael Farina
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