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Would you accept the price offered by the existing tenant

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Question - One of your tenants rents for $1,500 per month. Five years remain on their lease. The adjacent tenant wants to expand their operation. They are willing to pay $1,800 per month for the extra space. You approach the existing tenant who tells you that they will sell the lease for $13,000. The market discount rate is 10%. Financially speaking, would you accept the price offered by the existing tenant?

a. No, because the asking price of $13,000 is greater than the present value of the incremental rent payments to the landlord.

b. Yes, because the asking price of $13,000 is less than the present value of the incremental rent payments to the landlord.

c. No, because the asking price of $13,000 is less than the present value of the incremental rent payments to the landlord.

d. Yes, because the asking price of $13,000 is greater than the present value of the incremental rent payments to the landlord

Reference no: EM133079736

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