Raul Martinas, a professor of languages at Eastern University, owns a small office bullding adjacent to the university campus. He acquired the property 10 years ago at a total cost of $559,000-that Is, $52,000 for the land and $507,000 for the bullding. He has just recelved an offer from a realty company that wants to purchase the property; however, the property has been a good source of Income over the years, and so Martinas is unsure whether he should keep it or sell it. His alternatives are as follows: a. Keep the property. Martinas's accountant has kept careful records of the Income realized from the property over the past 10 years. These records indicate the following annual revenues and expenses: Martinas makes a $12,675 mortgage payment each year on the property. The mortgage will be pald off In eight more years. He has been depreclating the bullding by the straight-IIne method, assuming a salvage value of $76,050 for the bullding, which he still thinks is an approprlate figure. He feels sure that the bullding can be rented for another 15 years. He also feels sure that 15 years from now the land will be worth three times what he paid for it. b. Sell the property. A realty company has offered to purchase the property by paying $186,000 Immedlately and $36,750 per year for the next 15 years. Control of the property would go to the realty company Immedlately. To sell the property, Martinas would need to pay the mortgage off, which could be done by making a lump-sum payment of $126,500. Click here to view Exhiblt 10-1 and Exhiblt 10-2, to determine the approprlate discount factor(s) using tables. Required: Assume that Martinas requires a 12% rate of return. Compute net present value in favor of (or against) keeping the property using the total-cost approach. (Round discount factor(s) to 3 decimal places and other Intermedlate calculations to the nearest dollar amount.) Would you recommend that he keep or sell the property? Keep the property Sell the property EXHIBIT 10-1 Present Value of $1 P=(1+r)nFn EXHIBIT 10-2 Present Value of an Annuity of $1 Pn=r1[1(1+r)n1]