Use the information provided below to estimate the market value of the office building that has been described.

Type of Property

Office Building

Leasable Space

$100,000$ square feet

Average Rent

$$20\mathrm{.}00$ per square foot per year

Expected Rent Growth

$4\mathrm{.}50\%$ per year

Vacancy and Collection Losses

$15\mathrm{.}00\%$ of potential gross income

Other Income

$$1\mathrm{.}50$ per square foot per year

Expected Growth in Other Income

$3\mathrm{.}00\%$ per year

Operating Expenses

$27\mathrm{.}50\%$ of effective gross income

Capital Expenditures

$2\mathrm{.}50\%$ of effective gross income

Going$-$In Cap Rate

$5\mathrm{.}50\%$

Going$-$Out Cap Rate

$6\mathrm{.}25\%$

Selling Expenses

$4\mathrm{.}00\%$ of future selling price

Discount Rate

$6\mathrm{.}75\%$

$1.$ What is the market value of this property according to the direct capitalization approach?

Estimate the NOI for year $1.$

Use the appropriate cap rate.

$2.$ 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 $5$th year of ownership.

Estimate the NOI for the holding period $($each year individually$).$

Estimate the terminal value.

Use the appropriate discount rate to arrive at the NPV$.$

Please use an excel spreadsheet