You are starting a business and have signed a rental lease for an office in Santa Monica. This office lease is for four years with an annual rent of $24,000 per year, paid at the beginning of each year of the lease. However, just before you pay your first rent, the property owner decides he wants to use the space for another purpose and proposes to buy back the lease from you. The rent for any other similar space you can find for your business is $30,000 per year, also paid at the beginning of the year. What would be the minimum compensation that you would ask from the property owner to give up your original lease? Calculate the numerical answer. Assume the discount interest rate is 6%.
You are starting a business and have signed a rental lease for an office in Santa Monica. This office lease is for four years with an annual rent of $24,000 per year, paid at the beginning of each year of the lease. However, just before you pay your first rent, the property owner decides he wants to use the space for another purpose and proposes to buy back the lease from you. The rent for any other similar space you can find for your business is $30,000 per year, also paid at the beginning of the year. What would be the minimum compensation that you would ask from the property owner to give up your original lease? Calculate the numerical answer. Assume the discount interest rate is 6%.
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter27: Time Value Of Money (compound)
Section: Chapter Questions
Problem 5E
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