1. Your firm is expanding and needs an additional warehouse. It could purchase one for $1,000,000 and sell it after your estimated horizon of 10 years for $1,000,000. Alternatively, you could rent a similar one for $100,000/year, payable at the end of each year, on a triple net lease, i.e., the lessee (that’s your firm) is responsible for the property taxes, maintenance, and insurance, for 10 years.
1) Ignoring inflation and (income) taxes, which would you recommend to your board?