KU Real Estate Club_Case_Study

whitout exel please Trident Office is considering remodeling the office building it leases to Robert Roberts, CPA. The remodeling costs are estimated at $225,000. If the building is remodeled, Robert Roberts, CPA has agreed to pay an additional $75,000 per year in rent for the next five years. The discount rate is 10 percent. What is the benefit of the remodeling project to Professional Properties? a. $69,158.56 b. $59,309.01 c. -$69,158.56 d. $68,399.15 e. - $61,417.03

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eBook Differential Analysis Report Involving Opportunity Costs Five Star is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $149,200 of 6% U.S. Treasury bonds that mature in 16 years. The bonds could be purchased at face value. The following data have been assembled: Cost of equipment $149,200 Life of equipment 16 years Estimated residual value of equipment $27,200 Yearly costs to operate the warehouse, excluding     depreciation of equipment $55,600 Yearly expected revenues—years 1-8 84,700 Yearly expected revenues—years 9-16 74,000 Required: 1.  Prepare a differential analysis report of the proposed operation of the warehouse for the 16 years as compared with present conditions. Five StarProposal to Operate Warehouse  Differential revenue from alternatives:       $Revenue from operating warehouse     Revenue from investment in bonds…

Differential Analysis Involving Opportunity Costs On July 1, Campus Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a retail store. Alternatively, the company could use the funds to invest in $1,500,000 of 2% U.S. Treasury bonds that mature in 15 years. The bonds could be purchased at face value. The following data have been assembled: Line Item Description Amount Cost of store equipment $1,500,000 Life of store equipment 15 years Estimated residual value of store equipment $75,000 Yearly costs to operate the store, excludingdepreciation of store equipment $320,000 Yearly expected revenues—years 1-6 $400,000 Yearly expected revenues—years 7-15 $600,000   Required: Question Content Area 1.  Prepare a differential analysis as of July 1 presenting the proposed operation of the store for the 15 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter "0". If…

Quantitative Problem 1: Findley Furniture Company must install $5.9 million of new equipment in one of its plants. It can obtain a bank loan for 100% of the required amount. Alternatively, management believes it can arrange a lease. Assume that the following facts apply: 1. The equipment falls in the MACRS 5-year class. The applicable MACRS rates are 20%, 32%, 19%, 12%, 11%, and 6%. 2. The lease includes maintenance, whereas if the equipment is purchased, it would require maintenance provided by a service contract for $120,000 per year, payable at the end of the year. 3. Findley's federal-plus-state tax rate is 35%. 4. If the money is borrowed, the bank loan will be at a rate of 10%, amortized in 5 equal installments to be paid at the end of each year. 5. The tentative lease terms call for end-of-year payments of $1.25 million per year for 5 years. 6. At the end of the lease term, the equipment will have an estimated salvage value of $950,000. At that time, Findley plans to replace the…

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Differential Analysis Involving Opportunity Costs On August 1, Rantoul Stores Inc. is considering leasing a building and purchasing the necessary equipment to operate a retail store. Alternative company could use the funds to invest in $1,000,000 of 4% U.S. Treasury bonds that mature in 15 years. The bonds could be purchased at face The following data have been assembled: Cost of store equipment $1,000,000 Life of store equipment 15 years Estimated residual value of store equipment $50,000 Yearly costs to operate the store, excluding depreciation of store equipment $200,000 Yearly expected revenues-years 1-6 $300,000 Yearly expected revenues-years 7-15 $400,000 Required: 1. Prepare a differential analysis as of August 1 presenting the proposed operation of the store for the 15 years (Alternative 1) as compared with investing in U.S. Treasury bonds (Alternative 2). If an amount is zero, enter "0". Differential Analysis Operate Retail (Alt. 1) or Invest in Bonds (Alt. 2) August 1 Invest…

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Homework help. Chapter 25, number 2. Need helping filling in the blanks. Thank you!

Current Attempt in Progress Cheyenne Inc. owns and operates a number of hardware stores in the New England region. Recently, the company has decided to locate another store in a rapidly growing area of Maryland. The company is trying to decide whether to purchase or lease the building and related facilities. Purchase: The company can purchase the site, construct the building, and purchase all store fixtures. The cost would be $1,851,800. An immediate down payment of $405,100 is required, and the remaining $1,446,700 would be paid off over 5 years at $369,600 per year (including interest payments made at end of year). The property is expected to have a useful life of 12 years, and then it will be sold for $503,100. As the owner of the property, the company will have the following out-of-pocket expenses each period. Property taxes (to be paid at the end of each year) Insurance (to be paid at the beginning of each year) Other (primarily maintenance which occurs at the end of each year)…

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Current Attempt in Progress Your answer is partially correct. Vaughn Inc. owns and operates a number of hardware stores in the New England region. Recently, the company has decided to locate another store in a rapidly growing area of Maryland. The company is trying to decide whether to purchase or lease the building and related facilities. Purchase: The company can purchase the site, construct the building, and purchase all store fixtures. The cost would be $1,865,700. An immediate down payment of $415,500 is required, and the remaining $1,450,200 would be paid off over 5 years at $369,000 per year (including interest payments made at end of year). The property is expected to have a useful life of 12 years, and then it will be sold for $508,900. As the owner of the property, the company will have the following out-of-pocket expenses each period. Property taxes (to be paid at the end of each year) Insurance (to be paid at the beginning of each year) Other (primarily maintenance which…

Appendix One (Construct or lease)Objective: Should WLW lease or construct their own production facilityOption 1: ConstructCosts to incur:Buying land, construct building and getting ready for use$ 360,000Taxes, insurance, and repairs (per year) $ 34,000Intended years of use 20Projected market value in 20 years $ 1,600,000Maximum down payment WLW can make $ 500,000Remainder in four payments of; $ 160,000Revenue opportunityBuilding annex will be leased to a tenant and will generate a lease revenue (per year) for 10 years $60,000Option 2: Lease Intended years of use 20First lease payment due now $ 90,000Rest of the lease payments (years 2-20) $ 90,000Operating costs to be paid by WLWRepairs (annual) $ 9,000Maintenance (annual) $ 26,000Initial one-time deposit, will be returned in year 20$ 40,000Required rate of return 15%Methodology:The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction.Based on the analysis, they will recommend the…