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Professional Properties is considering remodeling the office building it leases to Heartland Insurance. The remodeling costs are estimated at RM3.4 million. If the building is

Professional Properties is considering remodeling the office building it leases to

Heartland Insurance. The remodeling costs are estimated at RM3.4 million. If the

building is remodeled, Heartland Insurance has agreed to pay an additional RM820,000

a year in rent for the next five years. The discount rate is 15 percent.

i) Calculate the NPV for the project. (6 marks)

ii) Should company accept the project? Why?

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