A company could sell a building for $250,000 or lease it for $2,500 per month. What would need to be considered in determining if the lease option would be preferred?

Accounting Question

Differential Analysis for a Lease or Buy Decision Laredo Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,000. The freight and installation costs for the equipment are $620. If purchased, annual repairs and maintenance are estimated to be $420 per year over the four-year useful life of the equipment. Alternatively, Laredo Corporation can lease the equipment from a domestic supplier for $1,380 per year for four years, with no additional costs. Prepare a differential analysis dated March 15 to determine whether Laredo Corporation should lease (Alternative 1) or purchase (Alternative 2) the equipment. (Hint: This is a "lease or buy" decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner.) If an amount is zero, enter "0". Differential Analysis Lease (Alt. 1) or Buy (Alt. 2) Equipment March 15 Lease Buy Differential Equipment (Alternative 1) (Alternative 2) (Alternative 2)…

Differential Analysis for a Lease or Buy Decision Laredo Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,220. The freight and installation costs for the equipment are $660. If purchased, annual repairs and maintenance are estimated to be $400 per year over the four-year useful life of the equipment. Alternatively, Laredo Corporation can lease the equipment from a domestic supplier for $1,420 per year for four years, with no additional costs. Prepare a differential analysis dated March 15 to determine whether Laredo Corporation should lease (Alternative 1) or purchase (Alternative 2) the equipment. (Hint: This is a "lease or buy" decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner.) If an amount is zero, enter "0". Differential Analysis Lease (Alt. 1) or Buy (Alt. 2) Equipment March 15 Lease Buy Differential Equipment (Alternative 1) (Alternative 2) (Alternative 2)…

Two potential real estate investments are under review by an investment firm. One is a 75,000 square foot office building in Portland, Oregon with a projected pre-tax leveraged IRR of 18.8% and the other is a 54-unit garden apartment building in Scranton, Pennsylvania with a projected pre-tax leveraged IRR of 14.5%. The investment firm should: a. Carefully weigh the projected returns relative to the potential risks of each investment during the due diligence process to determine whether either investment should be chosen b. Choose the Scranton apartment building with the lower expected IRR because it must be a safer investment c. Choose neither investment because both IRRs seem too good to be true in today’s market d.Choose the Portland industrial building with the higher expected IRR because it will definitely appreciate in value more over time

Acme Investors is considering the purchase of the undeveloped Baker Tract of land. It is currently zoned for agricultural use. If purchased, however, Acme must decide how to have the property rezoned for commercial use and then how to develop the site. Based on its market study, Acme has made estimates for the two uses that it deems possible, that is, office or retail. Based on its estimates, the land could be developed as follows: Rentable square feet Rents per square foot Operating expense ratio Average growth in NOI per annum Required return (r) Total construction cost per square foot Office 100,000 $ 42.00 Required: Which would be the highest and best use of this site? Which would be the highest and best use of this site? 40% 3% 13% $118 Retail 80,000 $ 52.50 50% 3% 14% $118

GBC Group is venturing into a commercial investment property, featuring a leasable building area of 100,000 square feet with an existing tenant paying a gross rent of $50 per square foot and estimated operating expenses at 50 % . The lender is proposing a permanent loan with a loan - to - value ratio of 70%, amortized over 15 years at a 5% interest rate (MPF = 0.007881). Considering a vacancy rate of 5% and a cap rate of 5%, what would be the indicated Breakeven Occupancy Ratio (BOR)? Question 10 options: 133 % 115 % 88% 106%

A developer plans to purchase a vacant lot and build apartment units for which represent the highest and best use of the land. Assuming the anticipated NOI for the projected units for $850,000, the market-derived cap rates for the building and land are 11% and 9% respectively, and the projected value of the proposed building is 5,900,000. Based on the land residual technique, the land value would be. a. $2,166,667 b. $2,233,333 c. $2,600,000 d. $2,900,000 The answer falls outside of the range provided. not satisfied from previous answer need well explained , computated and formulated answer