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Corrine Company owns a warehouse that it no longer needs in its own operations The warehouse was built at a cost of $270000 10 years ago at which time its estimated useful life was

Corrine Company owns a warehouse that it no longer needs in its own operations. The warehouse was built, at a cost of $270,000, 10 years ago, at which time its estimated useful life was 15 years. There are two proposals for the use of the warehouse: 1. Rent it at $72,000 per year, which includes estimated costs of $27,000 per year for maintenance, heat, and utilities to be paid by the lessor. 2. Sell it outright to a prospective buyer who has offered $225,000. Any capital gain would be taxed at the 30 percent rate. Required: a. Calculate the after-tax income if (1) Corrine Company keeps the warehouse and (2) if Corrine Company sells the warehouse. b. Which proposal should the company accept? Why?

Jun 19 2020 View more View Less

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