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 $35\%$ effective tax rate.Lewisville Company is currently leasing the warehouse to another company for $$6,100$ per month on a year$-$to$-$year basis. $($Hint: Use the PV function in Excel to calculate, on an after$-$tax basis, the PV of this stream of monthly rental receipts.$)$The warehouses estimated sales value is $$227,000.$ A commercial realtor believes that the price is likely to remain unchanged in the near future. The building originally cost $$65,500$ and is being depreciated at $$2,050$ annually. Its current net book value $($NBV$)$ is $$8,050.$Lewisville Company is seriously considering converting the warehouse into a factory outlet for furniture. The remodeling will cost $$155,000$ and will be modest because the major attraction 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$.)$The inventory and receivables $($net of current liabilities$)$ needed to open and sustain the factory outlet would be $$685,000.$ This total is fully recoverable whenever operations terminate.Lou is fairly certain that the warehouse will be condemned in $10$ years to make room for a new highway. The firm most likely would receive $$255,000$ from the condemnation.Estimated annual operating data, exclusive of depreciation, are as follows:Sales $($cash$)$$ $955,000$Operating expenses$ $555,000$Nonrecurring sales promotion costs at the beginning of year $1($i$.$e$.,$ at time $0)$ are expected to be $$117,000.($These costs are fully deductible for tax purposes.$)$Nonrecurring termination costs at the end of year $5$ are $$61,000.($These costs are fully deductible for tax purposes.$)$The after$-$tax discount rate for capital budgeting purposes is $12\%.($To calculate the present value factor for each year, i$,$ i $=1,5,$ use the following formula: PV factori $=(1-$: $1\mathrm{.}12$i$).$ The company is in the $35\%$ tax bracket $($federal and state combined$).$ Required:$1.$ 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, VDB function in Excel to calculate annual depreciation charges. Use NPV function to calculate depreciation tax savings$\mathrm{.}2.$ Indicate which course of action, based only on these data, should be taken. Req $1$

Req $2$