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Charles Wilson is a financial executive with Headland Enterprises. Although Charles Wilson has not had any formal training in finance or accounting, he has a
Charles Wilson is a financial executive with Headland Enterprises. Although Charles Wilson has not had any formal training in finance or accounting, he has a "good sense" for numbers and has helped the company grow from a very small company sales to a large operation $ in sales With the business growing steadily, however, the company needs to make a number of difficult financial decisions in which Charles Wilson feels a little "over his head." He therefore has decided to hire a new employee with "numbers" expertise to help him. As a basis for determining whom to employ, he has decided to ask each prospective employee to prepare answers to questions relating to the following situations he has encountered recently. Here are the questions.
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In Headland Enterprises negotiated and closed a longterm lease contract for newly constructed truck terminals and freight storage facilities. The buildings were constructed on land owned by the company. On January Headland took possession of the leased property. The year lease is effective for the period January through December Advance rental payments of $ are payable to the lessor owner of facilities on January of each of the first years of the lease term. Advance payments of $ are due on January for each of the last years of the lease term. Headland has an option to purchase all the leased facilities for $ on December At the time the lease was negotiated, the fair value of the truck terminals and freight storage facilities was approximately $ If the company had borrowed the money to purchase the facilities, it would have had to pay interest.
Compute the present value of lease vs purchase. Round foctor values to decimal places, es and finol answer to decimal places, es
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