A store has 1 year remaining on its lease in a mall. Rent is 2000 per month, so 12 months remain, and the next payment is due in 1 month. The mall's owner offered an alternative way: the new lease has no rent for the first 3 months, then payment is 2800 per month for the next 9 months. The store's WACC is 12 % per year.

(a) should the new least be accepted? Why?

(b) The store owner is not sure of the 12 % WACC ---- it should be higher or lower. At what nominal WACC would the store owner be indifferent between the two leases?