You own a business and have rented out a large office building, paying $24,000/year for the next 5 years. At the moment, half of your office space is unused and you are thinking of subleasing it out to a tenant, who will pay you $7,000 each year for the use of the space for the next 5 years. Doing so, though, will result in you running out of space for your own business in the fourth year, and you have to pay a temp service $16,000/year for years 4 and 5 to pick up the slack. Ignoring taxes, what is the NPV of subleasing the space? (Your cost of capital is 7%)

a.

5087.28

b.

2236.5

c.

6595.32

d.

-3250