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You are estimating the value of a small office building. Suppose the estimated NOI for the first year of operations is $100,000.

If you expect that NOI will remain constant at $100,000 over the next 50 years and that the office building will have no value at the end of 50 years, what is the present value of the building assuming a 12.2% discount rate? If you pay this amount, what is the indicated initial cap rate?

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