What is the Effective Rent under 10% discount rate assumption) for a 7-year net lease with rent fixed at $20/SF, in which the landlord agrees to give the tenant one year free rent up front and to pay for $10/SF worth of tenant improvements?

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The correct answer is A.The effective rent is calculated as the present value of the rent payments over the lease term, divided by the number of years in the lease term. In this case, the rent is fixed at $20/SF, and the lease term is 7 years. The landlord agrees to give the tenant one year free rent up front, so the effective rent is calculated as follows:Effective Rent = (Present Value of Rent Payments) / (Number of Years in Lease Term)= (PV of $20/SF x 6 years) / 7= ($20/SF x 6 years x 0.7513) / 7= $14.40/SF

What Is the Effective Rent Under 10% Discount Rate Assumption)