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The XYZ Company has a choice between two warehouses.A lease at location A costs $1000 per month with a payment of $2000 up front to guarantee the 3 year lease.Location B would cost $1200 per month and would be leased from month to month.The anticipated revenue in either location is $1500 per month.The estimated rate of return is 10% per year.Using net present value,determine which location would be the better choice.
Percent Decline
A measurement of the decrease in the value or price of an asset or investment, expressed as a percentage.
Transfer Payments
Payments made by the government to individuals or other entities without the government receiving any goods or services in return.
Semiannually Compounded
Interest computed twice a year, applying to both the initial principal and the interest already accrued from the first half of the year.
Rate of Return
The increase or decrease in the value of an investment during a set time frame, represented as a percentage.
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