Question

The Porter Beverage Factory owns a building for its operations. Porter uses only half of the building and is considering two options for the unused space. The Popcorn Store would like to purchase the half of the building that is not being used for $306,000. A 5% commission would have to be paid at the time of purchase. The Porter Beverage would like to lease the half of the building for the next 5 years at $80,800 each year. Porter would have to continue paying $16,800 of property taxes each year and $3,200 of yearly insurance on the property, according to the proposed lease agreement.

Determine the differential income or loss from the lease alternative. Enter a loss as a negative number.

Answer 1