Lou Lewis, the president of Lewisville Company, has asked you to give him an analysis of the best use of a warehouse the company owns. Note: The company has a 32% effective tax rate. a. Lewisville Company is currently leasing the warehouse to another company for $5,200 per month on a year-to-year basis. (Hint Use the PV function in Excel to calculate, on an after-tax basis, the PV of this stream of monthly rental receipts.) b. The warehouse's estimated sales value is $204,000. A commercial realtor believes that the price is likely to remain unchanged in the near future. The bullding originally cost $61,000 and is being depreciated at $1,600 annually. Its current net book value (NBV) is $7,600. c. Lewisville Company is seriously considering converting the warehouse into a factory outlet for furniture. The remodeling will cost $110,000 and will be modest becouse the major attroction will be rock-bottom prices. The remodeling cost will be depreciated over the next 5 years using the double-declining-balance method. (Note: Use the VDB function in Excel to calculate depreciation charges. The advantage of using the VDB, rather than the DDB, function is that there is a (default) option in the former that provides an'automatic switch-to the straight-line method when it is advantageous to do so.) d. The inventory and recelvables (net of current liabilities) needed to open and sustain the factory outlet would be $620,000. This total is fully recoverable whenever operations terminate. e. Lou is fairly certain that the warehouse will be condemned in 10 years to make room for a new highway. The firm most likely would recelve $210,000 from the condemnation. t. Estimated annual operating dato, exclusive of depreciation, are as follows: Soles(cash)Operatingexpensess910,000s510,800. 9. Nonrecurring soles promotion costs at the beginning of year 1 (i.e., ot time 0 ) are expected to be $104,000. (These costs are fully deductible for tox purposes.) h. Nonrecurring termination costs at the end of year 5 are $52.000. (These costs are fully deductible for tax purposes.) 1. The after-tax discount rate for capital budgeting purposes is 8%. (To colculate the present volue factor for each year, 6,1=1,5, use the following formula: PV factor i=(11.08i ). The company is in the 32% tax bracket (federal and state combined). Required: 1. Show how you would hardile the individual items in determining whether the company should continue to lease the spoce or convert it to a factory outlet. Use PV function in Excel, VDB function in Excel to calculate annual depreciation charges. Use NPV function to colculate depreciation tax savings. 2 Indicate which course of action, based only on these dato, should be taken. Complete this question by entering your answers in the tabs below. Show how you would handle the individual iterns in determining whether the company should continue to lease the space or convert it to a factory out function in Excel to calculate annual depredation charges. Use NPV function to calculate deprediation tax savings. (Negative amounts ahould be indicat answers to the nearest whole dollar, ) lequired: Show how you would handle the individual nems in determining whether the company should continue to lease the space or convert to a foctory outlet Use PV function in Excel. VDB function in Excel to calculate annual depreciotion charges. Use NPV function to alculate depreciotion tox sovings 2. Indicate which course of action, based only on these doto, should be taken. Complete this question by entering your answers in the tabs below. Show how you would handle the individual items in determining whether the company should continue to lease the space or convert it to a factory outlet. Use PV function in Excel, vD function in Excel to calculate annual depreciation charges. Use NFV function to calculate depredation tax savings. (Negative amounts should be indicated by a minus sign. Round your answers to the nearest whole dotar.) a. Lewisville Company is currently leasing the warehouse to another company for $5,200 per month on a year-to-year basis. (Hint Use the PV function in Excel to calculate, on an after-tax basis, the PV of this stream of monthlyrental receipts.) b. The warehouse's estimated sales value is $204,000. A commercial realtor believes that the price is likely to rema in unchanged in the near future. The building originally cost $61,000 and is being depreciated at $1,600 annually. Its current net book value (NBV) is $7,600. c. Lewisville Company is seriously considering converting the warehouse into a factory outlet for furniture. The remodeling will cost $110,000 and will be modest because the major attraction will be rock-bottom prices. The remodeling cost will be depreciated over the next 5 yeors using the double-declining-balance method. (Note. Use the VDB function in Excel to calculate depreciation charges. The advantage of using the VDB, rather than the DDB, function is that there is a (default) option in the former that provides an automatic switch to the straight-line method when it is advantageous to do so.) d. The inventory and receivables (net of current liabilities) needed to open and sustain the factory outlet would be $620,000. This total is fully recoverable whenever operotions terminate. e. Lou is fairly certain that the warehouse will be condemned in 10 years to make room for a new highway. The firm most likely would recelve $210,000 from the condemnation. f. Estimated annual operating data, exclusive of depreciation, are as follows Sales (cash) Operating expenses s910,009s510,000 9. Nonrecurring sales promotion costs at the beginning of year 1 (i.e, at time 0 ) are expected to be $104,000 ( These costs are fully deductible for tax purposes) h. Nonrecurring termination costs at the end of year 5 ore $52,000. (These costs are fully deductible for tax purposes) 1. The after-tax discount rate for copital budgeting purposes is 8%. (To calculate the present value factor for each year, 1,1=1,5, use the following formula: PV factor 1=(11.08i ) The company is in the 32% tax bracket (federal and state combined) Required: 1. Show how you would handie the individual items in determining whether the company shouid continue to lease the space or canvert it to a factory outlet Use PV function in Excel, VDB function in Excel to calculate annual depreciation charges. Use NPV function to calculate depreciation tax savings. 2 Indicate which course of action, based only on these data, should be taken Complete this question by entering your answers in the tabs below. Indicate which course of action, based only on these data, should be taken