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A store has 5 years remaining on its lease in a mall. Rent is $1,900 per month, 60 payments remain, and the next payment is due in 1 month. The mall's owner plans to sell the property in a year and wants rent at that time to be high so that the property will appear more valuable. Therefore, the store has been offered a "great deal" (owner's words) on a new 5-year lease. The new lease calls for no rent for 9 months, then payments of $2,600 per month for the next 51 months. The lease cannot be broken, and the store's WACC is 12% (or 1% per month).
Should the new lease be accepted? (Hint: Be sure to use 1% per month.)
If the store owner decided to bargain with the mall's owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and the old leases? (Hint: Find FV of the old lease's original cost at t = 9, then treat this as the PV of a 51-period annuity whose payments represent the rent during months 10 to 60.) Round your answer to the nearest cent. Do not round your intermediate calculations. $
The store owner is not sure of the 12% WACC — it could be higher or lower. At what nominal WACC would the store owner be indifferent between the two leases? (Hint: Calculate the differences between the two payment streams; then find its IRR.) Round your answer to two decimal places. Do not round your intermediate calculations.
A printer costs $900 and its salvage value after 5 years is $300. Annual maintenance is $50. If the interest rate is 8%, the equivalent uniform annual cost (EUAC) is
Explain what a transaction is; show the impact of transactions on the accounting equation.- King Design specializes in imported clothing. During March, King completed a series of transactions.
A stock recently increased in price from $33 to $48. Using Ø, what are the primary and secondary support areas for the stock?
Describe pertinent information about each competitor including their gross sales revenue for the past year.
Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. What the RATFCF’s associated with the purchase of this machine? What is the TCF associa..
Cheeseburger and Taco Company purchases 11,446 boxes of cheese each year. It costs $10 to place and ship each order and $7.78 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders. Calculate..
Bullock Gold Mining. from essential of corporate finance. Constructed a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, and net present value of the proposed mine. Based on your analysis, should..
You have an investment account that started with $4000 10 years ago and which now has grown to $12000. What annual rate of return have you earned (you have made no additional contributions to the account)?
Heath Foods's bonds have 15 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 9%. They pay interest annually and have a 7% coupon rate. What is their current yield?
A company has target weights of debt, preferred and common equity of 20%, 10% and 70%, respectively. It has liquidation values of debt, preferred and common equity of 30%, 15% and 55%. Its book values of debt, preferred and common equity are 40%, 10%..
It has had a credit rating of BB and a yield to maturity of 8.7 percent. What will be the change in the bond’s price in dollars and percentage terms?
The EOQ model for cash management defines the optimal level of cash to order through a variable known as "storage costs".
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