Please show all work and submit an excel file.

Type of Property: Office Building Leasable Space: 60,000 square feet Average Rent: $43.55 per square foot per year Expected Rent Growth: 4.76% per year Vacancy and Collection Losses: 8.6% of potential gross income Other Income: $3.15 per square foot per year Expected Growth in Other Income: 3.5% per year Operating Expenses: 40% of effective gross income Capital Expenditures: 5% of effective gross income Going-In Cap Rate: 5.82% Going-Out Cap Rate: 6.19% Selling Expenses: 5% of future selling price Discount Rate: 7.65%

a. What is the market value of this property according to the direct capitalization approach?

b. What is the market value of this property according to the discounted cash flow approach? Assume that you are going to sell the property at the end of the 5th year of ownership