You own an office building that is currently vacant but are entertaining offers from two different potential tenants for a 5-year term. One offer is a 5-year lease starting with rent of $100,000 next year and will increase at 3% per year. The other potential tenant prefers a fixed lease payment that will not increase over the 5-year lease. What is the minimum fixed annual rental payment you would accept for a five-year agreement? Use a discount rate of 10%.

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Solution Given P1 100000 interest 3 per year r10 t5 ... View the full answer