Lease Question (I am stumped)

Tommy2010 · 08-07-2009, 12:09 PM

Company A is willing to put out 1,450,000 for a lease on some property and ONLY charge $7.25 for the square footage rate!!

However, Company B is willing to put out $750,000 for a lease on the same property, and charge $18.50 per square foot.

The taxes will be $21,161 for Company A and $10,500 for Company B.

Who would you pick? Can you give me a formula to use? Thanks.

Tommy2010 · 08-07-2009, 12:18 PM

Bump. Reps guys!

bigrig5656 · 08-07-2009, 12:21 PM

what is the square footage of the place brah?

Tommy2010 · 08-07-2009, 12:23 PM

14,940

bigrig5656 · 08-07-2009, 12:26 PM

also how many years are you expecting the lease?

bigdan · 08-07-2009, 12:28 PM

Quote:

Originally Posted by Tommy2010

Company A is willing to put out 1,450,000 for a lease on some property and ONLY charge $7.25 for the square footage rate!!

However, Company B is willing to put out $750,000 for a lease on the same property, and charge $18.50 per square foot.

The taxes will be $21,161 for Company A and $10,500 for Company B.

Who would you pick? Can you give me a formula to use? Thanks.

wait by "put out" do you mean that they require an up front payment of $1,450,000 and then are charging $7.25 / sq ft a month after that?

The language you are using is vague and confusing. I would take a look at the notes or textbook, or talk to a classmate... it sounds like whatever it is it can't be that hard, but you need to understand the language in the question.

bigrig5656 · 08-07-2009, 12:31 PM

Well, so far, the first option, based on my assumptions should be 1,579,476 for the first year.
The second, will be 1,036,890 for the first year.
The difference between the two for a year is 168,075.
After 3 years, the first option will be cheaper.

Tommy2010 · 08-07-2009, 12:31 PM

Quote:

Originally Posted by bigdan

wait by "put out" do you mean that they require an up front payment of $1,450,000 and then are charging $7.25 / sq ft a month after that?

The language you are using is vague and confusing. I would take a look at the notes or textbook, or talk to a classmate... it sounds like whatever it is it can't be that hard, but you need to understand the language in the question.

I'm sorry. It is for my supervisor at the VA hospital. The 1,450,000 amount is what COMPANY A would want our VA to pay to meet our specifications. Same goes for the 750,000 amount.

bigrig5656 · 08-07-2009, 12:31 PM

Quote:

Originally Posted by bigdan

wait by "put out" do you mean that they require an up front payment of $1,450,000 and then are charging $7.25 / sq ft a month after that?

The language you are using is vague and confusing. I would take a look at the notes or textbook, or talk to a classmate... it sounds like whatever it is it can't be that hard, but you need to understand the language in the question.

Also this, you are leaving a lot of **** out.

Did you accidentally the whole thing?

DuLac · 08-07-2009, 12:34 PM

How long you going to be there?

Use X = # of years, and then figure out which one is less.

1,450,000 + 7.5*14,940 *12 *X

vs

750,000 +18.50*14,940*12*X

Then you will know

fenguin · 08-07-2009, 12:37 PM

Edit: ^ I'm aware
Edit 2: You sure that's the monthly rate?
Edit 3: Seems like that's the standard, so I'll adjust my calculations.

If you are only using the property for 5 months or less, Company B has the better rate.
If you are using the property for more than 5 months, Company A has the better rate.

Ecnewyx · 08-07-2009, 12:37 PM

Quote:

Originally Posted by Tommy2010

I'm sorry. It is for my supervisor at the VA hospital. The 1,450,000 amount is what COMPANY A would want our VA to pay to meet our specifications. Same goes for the 750,000 amount.

lol, is the misc going to decide how your VA hospital spends millions?

Tommy2010 · 08-07-2009, 12:49 PM

Quote:

Originally Posted by Ecnewyx

lol, is the misc going to decide how your VA hospital spends millions?

It is a 3 year base with five (1 yr renewal options). Which should I tell my supervisor would be the best value to the VA.

I wanted to surprise her since she is on leave right now.

bigrig5656 · 08-07-2009, 12:51 PM

The first option ends up being cheaper in that amount of time.

Tommy2010 · 08-07-2009, 12:56 PM

Quote:

Originally Posted by bigrig5656

The first option ends up being cheaper in that amount of time.

Can I have it in a formula setting. Thanks dude!

Tommy2010 · 08-07-2009, 01:10 PM

Quote:

Originally Posted by Tommy2010

Can I have it in a formula setting. Thanks dude!

I know Company B is cheaper for the short-term, but how can I prove that it is actually Company A that is cheaper for the three-year base?

Tommy2010 · 08-07-2009, 01:13 PM

Quote:

Originally Posted by Tommy2010

I know Company B is cheaper for the short-term, but how can I prove that it is actually Company A that is cheaper for the three-year base?

And for the taxes, what that means is what OUR part of the taxes would be PER YEAR.

With company A, our part of the taxes would be 10,500 dollars.
With company B, our part of the taxes would be 21,161 dollars.

fenguin · 08-07-2009, 01:14 PM

For 36 months:
Company A = 1450000 + 3 * 21161 + 36 * 14940 * 7.25 = $5,412,823
Company B = 750000 + 3 * 10500 + 36 * 14940 * 18.50 = $10,731,540