I need help with the practice review problems with steps. Analysis of AlternativesCh. 5- Time Value of MoneyInguinal Services, Corp. is looking for a new building to expand its production. Afteran exhaustive search, the following sites were leading contenders:1. Building A: Purchase for $600,000 cash.2. Building B: Lease for 25 years with annual lease payments of $69,000 made atthe beginning of each of the 25 years.3. Building C: Purchase with a note requiring both (1) 25 payments (made at theend of each of the 25 years) of $70,000 and (2) a single payment of $600,000 at theend of the 25th year.Assume Inguinal will be buying one of these buildings on 1/1/19. Additionally assumeeach building has a useful life of 25 years and that the prevailing interest rate is 12%.1.2.4. Building D: Purchase with $200,000 down and a note requiring payments of$45,000 made at the beginning of each of the next 25 years.INSTRUCTIONS:Calculate the cost of each building. You must show the formula(s) you will useand the variables you know for each building along with your calculation of itscost.Which building has the lowest cost? Write out the journal entry for thebuilding's purchase. What is the total cost of financing that purchase? Showcalculations.your

1. In the given case we need to compare 4 different building purhase options which involves cash flows at different time periods. 2. It is difficult to compare the options with cashflows at different periods. To compare the options we need bring these cashflows to present value by using the time value of money. 3. To bring future cash flows to present value , we need present value factor. we can use formula method or present value factor table to find the present value factor. To solve the given question we are usinf formula method. 4. Useful formula to solve ths given question is, Present value of annuity factor for Payments made at the beginning of each period =1+ [1 - {1/ (1+r)n-1}] / r here, r = rate of interest = 0.12 n = no. of payment periods (years) = 25years In the given case, Present value of Annuity factor for 25 years @ 12% interest rate for payments made at the beginning of each year =1+ [1- {1/(1+0.12)25-1}] / 0.12 =1+ [1-{1/(1.12)24}] / 0.12 = 8.7843 5.Another Useful formula to solve ths given question is, Present value of annuity factor for Payments made at the end of each period = [1 - {1/ (1+r)n}] / r here, r = rate of interest = 0.12 n = no. of payment periods (years) = 25years In the given case, Present value of Annuity factor for 25 years @ 12% interest rate for payments made at the end of each year = [1- {1/(1+0.12)25}] / 0.12 = [1-{1/(1.12)25}] / 0.12 = 7.8431 6. PV factor @12% for 25years is = 1/(1+r)n = 1/(1+0.12)25 =0.0588 7. Alternatively you can also use present value Annuity table to find out the value PV annuity factor @12%,25Years Cost of Building A Year Particulars Cash outflow PV Factor or PV Annuity factor Cost of Buiding a b c. d e= c x d 0 Cash payment 600000 1 600000 Cost of Building A 600000 Cost of Building B Year Particulars Cash outflow PV Factor or PV Annuity factor Cost of Buiding a b c. d e= c x d 1 to 25years Lease payment at beginning of year 69000 8.7843 606116.7 Cost of Building B 606116.7 Cost of Building c Year Particulars Cash outflow PV Factor or PV Annuity factor Cost of Buiding a b c. d e= c x d 1 to 25years Annual payments at end of year 69000 7.8431 541174 25th year Single Payment at the end 600000 0.0588 35294 Cost of Building c 576468 Cost of Building D Year Particulars Cash outflow PV Factor or PV Annuity factor Cost of Buiding a b c. d e= c x d 0 Down payment 200000 1 200000 1 to 25years Annual Payments at beginning of each year 45000 8.7843 395293.5 Cost of Building c 595293.5Since cost of building c is lower, it is suggestible to buy that building.Particulars Calculation Amount Total Payments to be made (including Interest) (69000 x 25) + 600000 2325000 Less: Intial cost -576468 Total cost of Finance (a-b) 1748532Dr/Cr Paticulars Debit ($) Credit ($) Dr Building C 576468 Cr Note Payable 576468