How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Dr. Fiona Chen Your Own Question
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 482
Experience:  Former IRS Revenue Agent
72280797
Type Your Finance Question Here...
Dr. Fiona Chen is online now
A new question is answered every 9 seconds

I have a ten year lease at 25,000 a month with 6 months free

Customer Question

I have a ten year lease at 25,000 a month with 6 months free rent & 3 percent increases annually for ten years .
I want to ask landlord to reduce rent to 20,000 a month with 3 percent increases years 1-3 and give landlord $200,000 upfront towards a $700,000 towards buildout which (he was supposed to be his contribution ).whAt increases would you suggest after year 3 that make him almost whole o eat the course of the lease including my upfront contribution .
Submitted: 1 year ago.
Category: Finance
Expert:  Dr. Fiona Chen replied 1 year ago.

Dear Customer,

I am not sure what you mean by make him almost whole 0.

I am enclosing the excel spreadseeht for your reference in addition to the copy and paste below so that you can manipulate the data yourself.

When we offer 0% rent increase, the total year 1 value is 2.34M. Unless you ask him to reduce rent after year 3, this amount cannot be .5M.

The reason we use year 1 value is that I did not discount back the half year rent back to year 0.

Tenant Discount back at Present Value Using 3% yearly compound to year 1 value LandLord

$ 2,340,125.95 $ 500,000.00

Year 0 $ 200,000.00 $ 200,000.00

Year 1 $ 120,000.00 $ 120,000.00

Year 2 $ 247,200.003% incr. $ 240,000.00

Year 3 $ 254,616.003% incr. $ 240,000.00

Year 4 $ 262,254.483% incr. $ 240,000.00

Year 5 $ 262,254.480% $ 233,009.71

Year 6 $ 262,254.480% $ 226,223.02

Year 7 $ 262,254.480% $ 219,634.00

Year 8 $ 262,254.480% $ 213,236.89

Year 9 $ 262,254.480% $ 207,026.11

Year 10 $ 262,254.480% $ 200,996.22

Regards,

Fiona Chen, MPA, PH.D., CPA, ABV, CFF, CITP