Appreciate some guidance on how to solve the following problem

Krasner Corporation is a diversified company with several manufacturing plants.Krasner's

Houston Plant has been supplying parts to truck manufacturers for over 20 years.The last

shipment of truck parts from the Houston Plant will be made on December 31, 2018.Krasner's

management is currently evaluating three alternatives relating to its soon-to-be-idle plant and

equipment in Houston.

1. Pufong Industries has offered to buy the Houston Plant for $3,000,000 cash on January 7, 2019.
2. Barreau Enterprises has offered to lease the Houston facilities for 4 years beginning on January 1, 2019. Barreau's annual lease payments would be $500,000 plus 10%
3. of the gross dollar sales of all items produced in the Houston Plant. Probabilities of
4. Barreau's annual gross dollar sales from the Houston Plant are estimated as follows:
6. Annual Gross Dollar Sales Estimated Probability
7. $2,000,000.1
8. 4,000,000.4
9. 6,000,000.3
10. 8,000,000.2

1. Krasner is considering the production of souvenir items to be sold in connection
2. with upcoming sporting events.The Houston Plant will be used to produce 70,000
3. items per month at an annual cash outlay of $2,250,000 during 2019, 2020, and 2021.
4. Ashley Payne, Vice President of Marketing, has recommended a selling price of $5
5. per item and believes the items will sell uniformly throughout2019, 2020, and 2021.
7. The adjusted basis of the Houston Plant as of the close of business on December 31, 2018 will be $4,200,000.Krasner has used straight-line depreciation for all capital
8. Assets at the Houston Plant.If the Houston Plant is not sold, the annual straight-line
9. Depreciation expense for the plant and equipment will be $900,000 for the next 4 years.The market value of the plant and equipment on December 3, 2021 is estimatedto be $600,000.
11. Krasner requires an after-tax rate of return of 16% for capital investment decisions
12. and is subject to a corporate tax rate of 40% on all income.
14. Questions:

1. Calculate the present value at December 31, 2021 of the expected after-tax cash flows for each of the three alternatives available to Krasner Corporation regarding the Houston Plant.Assume all recurring cash flows take place at the end of the year.
2. Discuss the additional factors, both quantitative and qualitative, Krasner Corporation should consider before a decision is made regarding the disposition or use of the idle plant and equipment at the Houston plant