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can you please explain how you got the answers thank you! lease's original cost at t = 9; then treat this as the PV of
can you please explain how you got the answers thank you!
lease's original cost at t = 9; then treat this as the PV of a 51-period annuity whose payments represent the rent make the store owner indifferent between the new and old leases? (Hint: Find PV of the old NPV AND IRR A store has 5 years remaining on its lease in a mall. Rent is $2,000 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 5-year lease. The new lease calls for no rent for 9 months, then payments of $2.750 per month for the next 51 months. The lease cannot be broken, and the store's WACC IS 12% (or 1% per month). a. Should the new lease be accepted? (Hint: Be sure to use 1% per month.) -Select- b. If the store owner decided to bargain with the mall's owner over the new lease payment, what new lease would t during months 10 to 60.) Round your answer to the nearest cent. Do not round your intermediate calculations. $ c. The store owner is not sure of the 12% WACC-it could be higher or lower. At what nominal WAOC would the store owner be indifferent between the two leases? (Hint: Calculate the differences between the two payment streams, then find its IRR.) Round your answer to two decimal places. Do not round your intermediate calculationsStep by Step Solution
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