19.

A store has 5 years remaining on its lease in a mall. Rent is $2,000 per month, 60 payments remain, and the nex payment is due in 1 month. The malls owner plans to sell the property in a year and wants rent at that time to bu high so that the property will appear more valuable. Therefore, the store has been offered a "great deal" (owner's words) on a new 5,year lease. The new lease calls for no rent for 9 months, then payments of $2,750 per month for the next 51 month. The lease cannot be broken, and the store's WACC is 12% (or 1% per month). a. Should the new lease be accepted? (Hints Be sure to use 1% per month.) b. If the store owner decided to bargain with che mall s owner over the new lease payment, what new lease Dayment would make the store owner indffecher between the new and old leases? (Hint: Find FV of the old c. The store owner is not sure of the 12% WAds 1