EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 5, Problem 3P
Summary Introduction
To determine: The
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Mauer Mining Company leases a special drilling press with annual payments of $100,000. The contract calls for rent payments at the beginning of each year for a minimum of 6 years. Mauer Mining can buy a similar drill for $490,000, but it will need to borrow the funds at 10%.
a. Determine the present value of the lease payments at 10%.
b. Should Mauer Mining lease or buy this drill?
An investor is under contract to buy a 2,000,000 square foot fully leased industrial park in Charleston, South Carolina as an investment at a price of $60,000,000. There are 12 tenants, each of which has a fifteen-year lease at a flat rental rate of $0.25 per square foot per month with an expense stop of $0.05 per square foot per month. Total annual operating expenses for the building are currently $1.20 per square foot per year. There is a ten-year interest-only mortgage loan with a principal balance of $40,000,000 at a 4.5% fixed annual interest rate that has six years remaining until the maturity date. The building/land ratio for tax depreciation purposes is 75/25. What is the annual tax depreciation?
a.$1,636,362
b.$1,538,462
c.$384,616
d.$1,153,846
An investor is under contract to buy a 2,000,000 square foot fully leased industrial park in Charleston, South Carolina as an investment at a price of $60,000,000. There are 12 tenants, each of which has a fifteen-year lease at a flat rental rate of $0.25 per square foot per month with an expense stop of $0.05 per square foot per month. Total annual operating expenses for the building are currently $1.20 per square foot per year. There is a ten-year interest-only mortgage loan with a principal balance of $40,000,000 at a 4.5% fixed annual interest rate that has six years remaining until the maturity date. The building/land ratio for tax depreciation purposes is 75/25. What is the acquisition cap rate?
a.7.00%
b.6.00%
c.8.00%
d.10.00%
Chapter 5 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 5.A - Prob. 1PCh. 5.A - Prob. 2PCh. 5.A - Prob. 3PCh. 5.A - Prob. 4PCh. 5.A - Prob. 5PCh. 5.A - Prob. 6PCh. 5 - Prob. 1QTDCh. 5 - Prob. 2QTDCh. 5 - Prob. 3QTDCh. 5 - Prob. 4QTD
Ch. 5 - Prob. 5QTDCh. 5 - Prob. 6QTDCh. 5 - Prob. 7QTDCh. 5 - Prob. 8QTDCh. 5 - Prob. 9QTDCh. 5 - Prob. 10QTDCh. 5 - Prob. 11QTDCh. 5 - Prob. 12QTDCh. 5 - Prob. 13QTDCh. 5 - Prob. 14QTDCh. 5 - Prob. 15QTDCh. 5 - Prob. 16QTDCh. 5 - Prob. 17QTDCh. 5 - Prob. 18QTDCh. 5 - Prob. 19QTDCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - Prob. 44PCh. 5 - Prob. 45P
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