Financial Option $1$: Purchase a $$10$ Million Building

Rationale for investment: The business is considering environmental, social, and corporate governance

$($ESG$)$ factors as part of its investment in a new building for its headquarters. The building itself will be a

Leadership in Energy and Environmental Design $($LEED$)-$certified building. However, the new site has a

large, inactive gas station that previously sold both gasoline and diesel fuel. The new site also has a large

repair facility that was used for deliveries and tractor$-$trailer trucks for more than $50$ years. Some

restoration was performed on the site, but the previous owner ran out of funds before they could bring

the site up to LEED standards. Four large fuel tanks remain on the site that will also need to be

addressed per LEED standards.

Assumptions to consider:

$$10$ million cash purchase

Building generates additional net profits after tax of $$1\mathrm{.}25$ million per year

$20-$year expected useful life of building

Salvage value: $$1\mathrm{.}5$ million

Discount rate is $10\%$

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