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Question
Expense: Stop
Jon has just moved his law firm into new space in Highrise 100 a relatively new class A office building. Jon has agreed to a five year $50 per square foot rent with a $10 expense stop (set at expected expense level for year one). In the recent past, expenses at the property have been increasing at 6% per annum. If future expenses continue at the same rate of increase what will Jons total cost of occupancy per square foot be in the last year of his lease?
| Yr. 1 | Yr. 2 | Yr. 3 | Yr. 4 | Yr. 5 | |
| Cash Rent | $50.00 | $50.00 | $50.00 | $50.00 | $50.00 |
| Expense | $10.00 | $10.60 | $11.24 | $11.91 | $12.62 |
| Expense Stop | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 |
| Expense Due | $ 0.60 | $ 1.24 | $ 1.91 | $ 2.62 | |
| Cost / sq. ft. | $50.00 | $50.60 | $51.24 | $51.91 | ? |
Answer
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