Question

In: Finance

Your company owns a large parcel of land in a neighboring city, which was purchased several...

Your company owns a large parcel of land in a neighboring city, which was purchased several years ago for $68,000 for a warehouse, which is no longer needed. Another company has offered you $20,000 per year for 20 years for the land. Due to some unusual financing arrangements your counter offer is for the $20,000 per year for 20 years plus an additional $10,000 six years from now and an additional $15,000 16 years from now. The other company agrees to the additional payments in years 6 and 16 but only if you agree to delay the start of the 20 equal $20,000 payments until three years from the date of agreement. By now, you and your boss are thoroughly confused. What is the present worth of each of the deals? Your company uses a MARR of 15% for this sort of analysis.

Solutions

Expert Solution


Please do rate me and mention doubts, if any, in the comments section.

jeff jeffy answered 1 day ago
Next > < Previous

Related Solutions

Look for a parcel of land in your city that would be a good location for...
Look for a parcel of land in your city that would be a good location for a new stadium or arena. How much does this land cost? What makes the choice of land favorable? (infrastructure nearby such as existing highways/roads etc.). What are some possible negative aspects of the choice?
The Perth Mining Company owns the mining rights to several tracts of land on which metals...
The Perth Mining Company owns the mining rights to several tracts of land on which metals have been found in the past. The amount of precious metals on some of the tracts is somewhat marginal, and the company is unsure whether it would be profitable to extract and sell the precious metals that these tracts contain. Tract 420 is one of these, and the following information about it has been gathered:   Investment in equipment needed    for extraction work $ 400,000...
A large company which owns several farms sells potatoes grown on these farms. The company claims...
A large company which owns several farms sells potatoes grown on these farms. The company claims that the weights of the potatoes grown on their farms are approximately normally distributed with a mean of 195.6g and a standard deviation of 23.8g. Restaurant A, which buys potatoes from this company, decides to weigh 60 potatoes grown by the company to determine whether the company's claim is true. (A)Assuming the farm's claim is true, describe the sampling distribution of the sample mean...
Carlson Development owns a prime parcel of land that can be developed into a residential, commercial,...
Carlson Development owns a prime parcel of land that can be developed into a residential, commercial, or industrial complex. Carlson plans to manage each of the projects for seven years and then cash out. After considerable research, Carlson estimates that cash flows from the three alternative projects are as follows:         Cash Flows In Millions Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Residential (25.0) 2.0 2.0 2.0 2.0 2.0 2.0...
2. Sizemore Company owns land that it purchased at a cost of $1,200,000 in 2013. The...
2. Sizemore Company owns land that it purchased at a cost of $1,200,000 in 2013. The company chooses to use revaluation accounting to account for the land. The land’s value fluctuate as follows (all amounts as of December 31): 2013, $1,350,000; 2014, $1080,000; 2015, $1,160,000; and 2016, $1,230,000. Instructions Prepare the journal entries to record the revaluation of the land in each year.
What would the journal entries for the following problem? Purchased a parcel of land on March...
What would the journal entries for the following problem? Purchased a parcel of land on March 1, 2019 for $990,000 by paying $480,000 in cash and signing a short-term note payable with the seller for $510,000. You must repay the $510,000 in exactly one year on March 1, 2020. You agree to pay the seller 5 percent interest (annual rate) on a quarterly basis (June 1, September 1, December 1, 2019, and March 1, 2020). [Adjusting Entry Required]
. The Green Shingle purchased a parcel of land 6 years ago for $299,500. Since the...
. The Green Shingle purchased a parcel of land 6 years ago for $299,500. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land for $28,000 a year. The Green Shingle is now considering building a hotel on the site. The current value of the land is $347,500. The firm has a mortgage secured by the property with $12,670 annual interest expenses, and would need to spend $64,000 to improve the...
Lisa is 16 years old. She owns a parcel of waterfront land that she inherited from...
Lisa is 16 years old. She owns a parcel of waterfront land that she inherited from her father who died in 2015. The land overlooks Tracadie Bay in Prince Edward Island and has direct access to a beach. The land is undeveloped. It is comprised of 5.6 acres in area and has 240 feet along the shore of Tracadie Bay. Lisa mows the grass on the property regularly during the summer but has no immediate plans to do anything with...
TOKI PJSC owns two pieces of land in Dubai. Land A was purchased in 2013 at...
TOKI PJSC owns two pieces of land in Dubai. Land A was purchased in 2013 at a cost of Dh10 million while Land B was purchased in 2014 at a cost of Dh12 million. The lands were classified as fixed assets, and were revalued as follows: Open market value Land A Land B Years revalued Dh million Dh million 2015 8 16 2017 12 11 2019 11 14 Required: At each valuation date, calculate the surplus or deficit arising on...
TOKI PJSC owns two pieces of land in Dubai. Land A was purchased in 2013 at...
TOKI PJSC owns two pieces of land in Dubai. Land A was purchased in 2013 at a cost of Dh10 million while Land B was purchased in 2014 at a cost of Dh12 million. The lands were classified as fixed assets, and were revalued as follows: Open market value Land A Land B Years revalued Dh million Dh million 2015 8 16 2017 12 11 2019 11 14 Required: At each valuation date, calculate the surplus or deficit arising on...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT