Suppose the Lease on a Certain Space Will Expire at the Beginning

question 10

Multiple Choice

Suppose the lease on a certain space will expire at the beginning of 2010. You believe that the probability of the existing tenant renewing is 75 percent. If they renew, you will need to spend only an estimated $5.00/SF to upgrade his space. If they do not renew, it will take $20.00/SF to modernize the space and there would be 4 months of expected vacancy in that case. What expected cash flow forecast should you put in year 2010 of your pro-forma for this space, if you expect triple-net market rents on new leases in 2010 to be $20/SF?

• A) zero.
• B) $7.92/SF.
• C) $9.58/SF. = PGI-VacAllow-E[TI] = $20 - 0.25*(4/12)*$20 - [0.75*$5.00+(1-0.25)*$20.00] = $20 - $1.67 - $8.75= $9.58.
• D) $11.25/SF.
• E) $15.00/SF.

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Definitions:

Neuroglia

Supportive cells in the nervous system that provide structure, nourishment, and protection for neurons.

Phagocytosis

The process by which a cell engulfs and digests solid particles to destroy them, gather information, or feed on them.

Electrical Signals

Electrical signals are impulses generated by the movement of ions across cell membranes, commonly found in nerve and muscle cells, facilitating communication within the body.

Neurotransmitters

Chemical messengers that transmit signals across a synapse from one neuron to another.