Suppose you are assigned to assess a 50,000-square-foot office building that currently is fully leased at $10 per square foot.

1.    Suppose you are assigned to assess a 50,000-square-foot office building that currently is fully leased at $10 per square foot.  The owner's annual costs of operation for the building (interest, maintenance, insurance) are $400,000.  The building is 10 years old and is expected to have an additional 20 years of useful life. Assuming these market conditions will continue, estimate the current market value of the building under the income approach if the discount rate is 10 percent.  How does the estimate differ if the discount rate is 5 percent?