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- 2013-9-14
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Below is a question, that I had some trouble with last night. Let me know what you get for this question.
Williams Warehousing currently has a warehouse lease that calls for five annual payments of $120,000. The warehouse owner, who needs cash, is offering Williams a deal wherein Williams will pay $200,000 this year and then pay only $80,000 each of the remaining 4 years. (Assume that all lease payments are made at the beginning of the year.) Should Williams Warehousing accept the offer if its required rate of return is 9%, and why?
A)
Yes, there is a savings of $49,589 in present value terms.
B)
Yes, there is a savings of $45,494 in present value terms.
C)
Yes, there is a savings of $80,000 over the five years.
D)
No, there is an additional $80,000 payment in this year.
Something doesnt seem right here. I did all the steps the solution asked.
Yes I used BGN. I got 129986 for first 200k.
But the 80,000PMTs just cannot add up to ~459 including the 129986.
Thx. |
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发表于 2013-4-2 11:24
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