The ABC Corporation is considering opening an office in a new market area that would allow it to increase its annual sales by $2.7 million. The cost of goods sold is estimated to be 40 percent of sales, and corporate overhead would increase by $310,000, not including the cost of either acquiring or leasing office space. The corporation will have to invest $2.7 million in office furniture, office equipment, and other up-front costs associated with opening the new office before considering the costs of owning or leasing the office space.
The ABC Corporation is considering opening an office in a new market area that would allow it to increase its annual sales by $2.7 million. The cost of goods sold is estimated to be 40 percent of sales, and corporate
A small office building could be purchased for sole use by the corporation at a total price of $6.5 million, of which $900,000 of the purchase price would represent land value, and $5.6 million would represent building value. The cost of the building would be
Required:
a. What is the return from opening the office building under the assumption that it is leased? (Do not round intermediate calculations
b. What is the return from opening the office building under the assumption that it is owned? (Do not round intermediate calculations
c. What is the return on the incremental
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