Given the following inforamtion, calculate the value of the fee simple estate assuming a 13% discount rate and a 5 year holding period are appropriate:
market rent: $500,000 increasing 3% per year
contract rent: $400,000 level
operating expenses: 50% of gross income
resale value: $3,000,000
a. $2,367,937
b. $2,55,261
c. $3,469,679
d. $2,887,445
Please show why the answer is correct,