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please help very confused In 2024, Riverbed Enterprises negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The
please help very confused
In 2024, Riverbed Enterprises negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were constructed on land owned by the company. On January 1, 2025, Riverbed took possession of the leased property. The 20-year lease is effective for the period January 1, 2025, through December 31, 2044, Advance rental payments of $747,000 are payable to the lessor (owner of facilities) on Janciary 1 of each of the first 10 years of the lease term. Advance payments of $420,000 are due on January 1 for each of the last 10 years of the lease term. Riverbed has an option to purchase all the leased facilities for $1 on December 31,2044 . At the time the lease was negotiated, the fair value of the truck terminals and frelght storage facilities was approximately $6,595,000, if the company had borrowed the money to purchase the. facilities, it would have had to pay 9% interest. Compute the present value of lease vs purchase. (Round foctor values to 5 decimal ploces, es 1.25124 and final answer to 0 decimal ploces, es. 458,581.) Should the compary have purchased rather than leased the facilities? Riverbed Enterprises should the facilities Step by Step Solution
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