Additional comments: Can you show how you got these NPV and IRR in calculations? I have conducted

Additional comments: Can you show how you got these NPV and IRR in calculations?

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I have conducted an in-depth analysis of the two potential projects under consideration for the unused building space - leasing to Diamond Events or building a craft brewery. Below is a summary of my analysis and recommendations: The leasing option has relevant benefits of $84,000 starting annual rent growing at 5% yearly. Costs include a $100,000 renovation and $7,500 increase in annual repairs/maintenance. The NPV of leasing is $95,430 at a 12% cost of capital. The IRR is 13.2%. For the brewery option, benefits include increased restaurant sales. Costs include $50,000 renovation, $75,000 equipment purchase, and $15,000 higher annual costs. Assuming ceasing operations after 6 years, the NPV is -$112,900 and IRR is 6.1% at 12% cost of capital. I have conducted an in-depth analysis of the two potential projects under consideration for the unused building space - leasing to Diamond Events or building a craft brewery. Below is a summary of my analysis and recommendations: The leasing option has relevant benefits of $84,000 starting annual rent growing at 5% yearly. Costs include a $100,000 renovation and $7,500 increase in annual repairs/maintenance. The NPV of leasing is $95,430 at a 12% cost of capital. The IRR is 13.2%. For the brewery option, benefits include increased restaurant sales. Costs include $50,000 renovation, $75,000 equipment purchase, and $15,000 higher annual costs. Assuming ceasing operations after 6 years, the NPV is -$112,900 and IRR is 6.1% at 12% cost of capital.

Answer rating: 100% (QA)

Based on the analysis provided I would recommend leasing the unused building space to Diamond Events ... View the full answer