NT RESOURCES CALCULATOR PRINTER VERSION 1 BACK NEXT Problem 6-10 OPIC 04 ENT e 6-07 (Part ubmission) e 6-08 (Part ubmission) Your answer is partially correct. Try again. Marigold 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. e 6-09 se 6-10 (Part Submission) se 6-12 em 6-07 (Part Submission). Purchase: The company can purchase the site, construct the building, and purchase all store fixtures, The cost would be $1,861,400. An immediate down payment of $406,400 is required, and the remaining $1,455,000 would be paid off over 5 years at $354,200 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 $508,400. 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) $41,860 em 6-08 Insurance (to be paid at the beginning of each year) 26,960 em 6-10 lem 6-14 17,170 $85,990 Other (primarily maintenance which occurs at the end of each year) - Score v Results by Study ive Lease: First National Bank has agreed to purchase the site, construct the building, and install the appropriate fixtures for Marigold Inc. if Marigold will lease the completed facility for 12 years. The annual costs for the lease would be $266,320. Marigold would have no responsibility related to the facility over the 12 years. The terms of the lease are that Marigold would be required to make 12 annual payments (the first payment to be made at the time the store opens and then each following year). In addition, a deposit of $104,900 is required when the store is opened. This deposit will be returned at the end of the 12th year, assuming no unusual damage to the building structure or fixtures. Click here to view factor tables Compute the present value of lease vs purchase. (Currently, the cost of funds for Marigold Inc. is 11%.) (Round factor values to 5 decimal places, e.g. 1.25124 and final ansiver to 0 decimal places, e.g. 458,581.) Purchase Lease 21232 Winde Present value 19793 Which of the two approaches should Marigold Inc. follow? 9:48 PM 3/27/2020 P Type here to search References- Google Chrome A edugen.wileyplus.com/edugen/player/references/index.uni?mode=help&xlinkobject=kieso9781119503682_hidden-sec-00848&itemid%3Dnopolice References Present Value of 1 (Present Value of a Single Sum) PVF..i = (1 + ) " %3D %3D (1+1)" (n) Periods 2½% 3% 4% 5% 6% 98039 97561 97087 96154 95238 94340 96117 95181 94260 92456 90703 89000 94232 92860 91514 88900 86384 .83962 79209 74726 92385 90595 88849 85480 82270 90573 88385 86261 82193 78353 79031 75992 73069 70259 67556 74622 71068 67684 64461 61391 70496 66506 62741 59190 55839 88797 86230 83748 87056 84127 .81309 85349 82075 78941 83676 80073 76642 10 .82035 78120 .74409 58468 55684 53032 52679 49697 46884 44230 41727 80426 76214 72242 64958 11 12 78849 74356 70138 62460 77303 72542 68095 60057 13 75788 70773 66112 57748 50507 14 69047 64186 55526 48102 15 .74301 62317 53391 45811 39365 67362 65720 16 72845 60502 51337 43630 37136 17 71416 41552 35034 64117 58739 49363 18 70016 33051 39573 37689 47464 57029 55368 68643 62553 19 45639 31180 67297 61027 20 53755 43883 35894 29416 65978 59539 CLOSE 953 PM 3/27/2020 Type here to search 67890 21 2345