Landover Corporation is looking for a larger office building to house its expanding operations. It is considering two alternatives. The first is a newly constructed building at a cost of $6 million. It would require only minor modifications to meet Landovers needs, at an estimated cost of $500,000. The second building was constructed in 1910 and is a certified historic structure. It could be purchased for $3 million but would require an additional $4 million in renovations to be suitable for Landover. Use Appendix A and Appendix B.

Required:

1. Calculate Landovers allowable rehabilitation credit if it chooses to purchase and renovate the certified historic structure, and the after-tax purchase price of the building. Assume Landover would claim the credit ratably over years 0 through 4. Landover uses a 4 percent discount rate to calculate present value.
2. Based on your analysis, which building should Landover acquire?

How do I find allowable rehab credit and after tax purchase price?

Problem 11-11 (Static) (LO 11-5) Landover Corporation is looking for a larger office building to house its expanding operations. It is considering two alternatives. The first is a newly constructed building at a cost of $6 million. It would require only minor modifications to meet Landover's needs, at an estimated cost of $500,000. The second building was constructed in 1910 and is a certified historic structure. It could be purchased for $3 million but would require an additional $4 million in renovations to be suitable for Landover. Use Appendix A and Appendix B. Required: a. Calculate Landover's allowable rehabilitation credit if it chooses to purchase and renovate the certified historic structure, and the after-tax purchase price of the building. Assume Landover would claim the credit ratably over years 0 through 4. Landover uses a 4 percent discount rate to calculate present value. b. Based on your analysis, which building should Landover acquire? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Calculate Landover's allowable rehabilitation credit if it chooses to purchase and renovate the certified historic structure, and the after-tax purchase price of the building. Assume Landover would claim the credit ratably over years 0 through 4. Landover uses a 4 percent discount rate to calculate present value. (Enter your answers in dollars not in millions of dollars.) $ Allowable rehab credit After-tax purchase price Amount 800,000 6,200,000 x $ Required A Required B >