You are considering whether to buy or lease a building. Your cost of capital Building cost (if you pay cash today) Useful life 10% 1,121,900.00 12 years Option 1 You can pay 20% down payment today and the remaining in a fixed instalments every year, starting a year from now. Amount 216,381.00 Number of year 6 The building can be sold at the end of its useful life for cash at the amount of 201,942.00 You also have to pay the property tax at the end of each year for the amount of 67,314.00 Enter your answers using positive numbers for cash outflows and negative numbers for cash inflows. Present value of the fixed payments 1,121,900.00 (4 marks) Present value of the property tax (4 marks) There may be other components of present values that you need to consider in addition to the above. Total present value of this option (5 marks) every month Option 2 A bank would purchase the building and lease it to you. The lease agreement specifies the amount and timing as follows: Lease payment 13,829.00 Timing starting today You are required to pay a deposit today, which will be returned to you at the end of the lease if there is no damage to the building. Amount of deposit 134,628.00 You estimate that there is a change of some damages and you will only get a portion of the deposit back. Expected portion of deposit to be received 80% Enter your answers using positive numbers for cash outflows and negative numbers for cash inflows. Present value of the fixed payments (5 marks) Present value of the deposit returned to you (5 marks) There may be other components of present values that you need to consider in addition to the above. Total present value of this option (5 marks) Which option do you prefer? (2 marks)