The effective rent calculation is a common measure used to compare the true cost of one lease to another. While there are a number of limitations to this methodology, the effective rent calculation captures:
A) interlease risk
B) re-leasing costs
C) the advantages associated with lease flexibility
D) the time value of money

Question

Quizplus · Accepted Answer

The effective rent calculation captures the time value of money, which takes into account the present value of future rental payments. This allows for a more accurate comparison of leases over time. While there may be other factors that impact the true cost of a lease, such as re-leasing costs and lease flexibility, the effective rent calculation is specifically focused on the impact of the time value of money.

The Effective Rent Calculation Is a Common Measure Used to Compare