Question: It should be solved by hand, without excel or financial calculator. You have just inherited an office building. You expect the annual rental income (net

It should be solved by hand, without excel or financial calculator.

You have just inherited an office building. You expect the annual rental income (net of maintenance and other cost) for the building to be $100,000 for the next year and to increase at 5% per year indefinitely. A expanding internet company offers to rent the building at a fixed annual rent for 5 years. After year 5, you could re-negotiate or rent the building to another tenant. What is the minimum acceptable fixed rental payments for this five-year agreement? Use a discount rate of 12%

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