What would it cost to lease the property


Top-Quality Stores, Inc., owns a nationwider chain of supermarkets. The company is going to open another store soon, and a suitable building site has been located in an attractive and rapidly growing area. In discussing how the company can acquire the desired building and other facilities needed to open the new store, Sam Watkins, the company's vice president in charge of sales, stated, "I know most of our competitors are starting to lease facilities rather than buy, but I just can't see the economics of it. Our development people tell me that we can buy the building site, put a building on it, and get all the store fixtures we need for just $853,000. They also say that property taxes, insurance, and repairs would run $19,400 a year. When you figure that we plan to keep a site for 18 years, that's a total cost of $959,100. But then when you realize that the property will be worth at least a half million in 18 years, that's a net cost to us of only $459,100. What would it cost to lease the property?"

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: What would it cost to lease the property
Reference No:- TGS0708427

Expected delivery within 24 Hours