A store has 5 years remaining on its lease in a mall. Rent is $1,900 per month, 60 payments remain, and the next payment is due in 1 month. The mall's owner plans to sell the property in a year and wants rent at that time to be high so that the property will appear more valuable. Therefore, the store has been offered a great deal owner's words) on a new year lease. The new lease calls for no rent for 9 month, then payments of $2,500 per month for the next 51 months. The lease cannot be broken, and the store's WACCI 12% (or 1 per month Should now and the accepted? Hint: Be sure to use 15 per month b. If the store owner dedded to bargain with the mall's owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and old lases? (Hint: Find PV of the old law's eniginal costatt - 9; then treat this as the PV of 51.period annuity whose payments represent the rent during months 10 to 60.) Do not round Intermediate calculations. Round your answer to the nearest cent The store owner is not sure of the 12% WACC-It could be higher or lower. At what nominal WACC would the store owner be indifferent between the two leases (Hint: Calculate the differences between the two payment streams; then find its IRR) Do not found intermediate calculations. Round your answer to two decimal places A mining company is considering a new project. Because the mine has received a permit, the project would be legal; but it would chose significant harm to a nearby river. The firm could spend an additional $9.33 million at Year to mitigate the environmental Problem, but it would not be required to do so. Developing the mine (without mitigation) would require an initial outlay of 554 million, and the expected cash inflows would be $18 million per year for 5 years. If the firm dons invest in mitigation, the annual inflows would be 519 million. The risk-adjusted WACC IS 11% Calculate the NPV and Tree with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55, do not round intermediate calculations, Round your answers to two decimal places NPV: 5 1,89 million ERRI 15.24 Calculate the NPV and IRR without mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places NPV 7.79 million TRR: 19.85 How should the environmental effects be dealt with when this project is evaluated? The environmental effects if not mitigated could result in additional loss of cash flows and/or fines and penalties due to it will among customers, community, etc. Therefore, even though the mine is legal without mitigation, the company needs to make sure that they have anticipated all costs in the "no mitigation analysis from not doing the environmental mitigation II. The environmental effects should be ignored since the mine legal without mitigation III. The environmental effects should be treated as a surk cost and therefore ignored. IV. The environmental effects if not mitigated would result in additional cash rows. Therefore, since the mine is legal without mitigation, there are no benefits to
