# What is the effective annual rent for Lease 1 and Lease 2? When you compute the answer,

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## Question:

What is the effective annual rent for Lease 1 and Lease 2? When you compute the answer, assume the annual discount rate is 7%. Also assume annual rents are paid once per year.

Lease 1 is 5 years. The base rent in 2020 is $13.50 per square foot per year. Each year, the base rent increases by $0.50 per year.

Lease 2 is 6 years. The base rent in 2020 is $13.00 per square foot per year. Each year, the base rent increases by 5% per year.

**Related Book For**

## Financial Reporting Financial Statement Analysis and Valuation

ISBN: 978-0324302950

6th edition

Authors: Clyde P. Stickney