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MGMT 8500: F21-Capstone -V2 Appendix One (Construct or lease) Objective: Should WMM lease or construct their own production facility $ 300,000 $ 20,000 18 $ 1,300,000 $ 500,000 Option 1: Construct Costs to incur. Actual expenditure towards buying land, construct building and getting ready for use Taxes, insurance, and repairs (per year) Intended years of use Projected market value in 18 years Budgeted maximum expenditure towards buying land, construction of building and getting ready for use. Remainder in four payments of, Option 2: Lease Intended years of use First lease payment due now Rest of the lease payments (years 2-17) Operating costs to be paid by WMM Repairs expenses (annual) Maintenance (annual) Initial one-time deposit, will be returned in year 18 Required rate of return $ 175,000 18 $ 100,000 $ 120,000 $ 17,000 $ 18,000 $ 10,000 14% Methodology The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option (construction or leasing). PROTECTED VIEW This file has been verified by Microsoft Defender Advanced Threat Protection and it hasn't detected any threats. If you need to eart this file click enable bune. E8 F G H D B Data set Calculations . 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 -9 Total marks 0 1 Cover page Marking key Appendix 1 Appendix 2 Appendix 3 Appendix 4 FA MGMT 8500: F21-Capstone -V2 Appendix One (Construct or lease) Objective: Should WMM lease or construct their own production facility $ 300,000 $ 20,000 18 $ 1,300,000 $ 500,000 Option 1: Construct Costs to incur. Actual expenditure towards buying land, construct building and getting ready for use Taxes, insurance, and repairs (per year) Intended years of use Projected market value in 18 years Budgeted maximum expenditure towards buying land, construction of building and getting ready for use. Remainder in four payments of, Option 2: Lease Intended years of use First lease payment due now Rest of the lease payments (years 2-17) Operating costs to be paid by WMM Repairs expenses (annual) Maintenance (annual) Initial one-time deposit, will be returned in year 18 Required rate of return $ 175,000 18 $ 100,000 $ 120,000 $ 17,000 $ 18,000 $ 10,000 14% Methodology The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option (construction or leasing). PROTECTED VIEW This file has been verified by Microsoft Defender Advanced Threat Protection and it hasn't detected any threats. If you need to eart this file click enable bune. E8 F G H D B Data set Calculations . 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 -9 Total marks 0 1 Cover page Marking key Appendix 1 Appendix 2 Appendix 3 Appendix 4 FA