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Below are the assumptions and data taken for the computation of NPV: 16% is the required rate of return as given by the company. 18
Below are the assumptions and data taken for the computation of NPV: 16% is the required rate of return as given by the company. 18 years is the least period as provided by the executive vice president. $120000 is the annual least payment amount as given by the executive by its president. The initial lease payment becomes due now and the remaining are due in years 1 to 17 as provided by the development. $8000 is the security deposit for leasing according to the vice president in charge of sales. Maintenance costs for leasing are $4,500 per year as stated by the executive vice president. The amount of the security deposit is refundable at the end of the lease term. $850000 is the purchase price of the building site as provided by the development. $350000 is the down payment to buy the building as given by the executive vice president. The rest of the cost which is $500000 is paid for over 4 years at 175000 per year which includes an interest rate of 10.05%. 7500, 8000 and 4500 are the property taxes, insurance costs and repairs and maintenance costs respectively as given by the executive vice president. $500000 is the salvage value of the property after 18 years.
Below are the assumptions and data taken for the computation of NPV: 16% is the required rate of return as given by the company. 18 years is the least period as provided by the executive vice president. $120000 is the annual least payment amount as given by the executive by its president. The initial lease payment becomes due now and the remaining are due in years 1 to 17 as provided by the development. $8000 is the security deposit for leasing according to the vice president in charge of sales. Maintenance costs for leasing are $4,500 per year as stated by the executive vice president. The amount of the security deposit is refundable at the end of the lease term. $850000 is the purchase price of the building site as provided by the development. $350000 is the down payment to buy the building as given by the executive vice president. The rest of the cost which is $500000 is paid for over 4 years at 175000 per year which includes an interest rate of 10.05%. 7500, 8000 and 4500 are the property taxes, insurance costs and repairs and maintenance costs respectively as given by the executive vice president. $500000 is the salvage value of the property after 18 years.
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