The XYZ Company has a choice between two warehouses.A lease at location A costs $1000 per month with a payment of $2000 up front to guarantee the 3 year lease.Location B would cost $1200 per month and would be leased from month to month.The anticipated revenue in either location is $1500 per month.The estimated rate of return is 10% per year.Using net present value,determine which location would be the better choice.

Question

Quizplus · Accepted Answer

The Answer of The XYZ Company has a choice between two warehouses.A lease at location A costs $1000 per month with a payment of $2000 up front to guarantee the 3 year lease.Location B would cost $1200 per month and would be leased from month to month.The anticipated revenue in either location is $1500 per month.The estimated rate of return is 10% per year.Using net present value,determine which location would be the better choice.

The XYZ Company Has a Choice Between Two Warehouses