Refer to the highest and best use analysis in Exhibit 10€“9. Suppose the warehouse income would grow at 3 percent per year instead of 2 percent. Does this change the highest and best use of the site? If so, what is the new implied land value?

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(a) (b) (a ÷ c = d) Implled Property Value (PV) (d) – (e) Implled Land Value (residual) Construction Cost of Bldg. Year 1 NOI (r – g) .10 Use .13 - .03 Office Retail Apartment Warehouse $500,000 $5,000,000 $4,000,000 $1,000,000 .13 - .05 .08 .09 4,500,000 .08 5,000,000 1,500,000 1,000,000 .12 - .03 .10 - .02 3,000,000 4,000,000 405,000 400,000