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Your company owns a warehouse it doesn't use. Instead, the company rents it out to another firm. At the end of this next year, the rents will total $$82,000.$ Recently, that annual rent has been rising about $4\mathrm{.}0\%$ to keep up with inflation.

In a general meeting of managers of your firm, you hear this:

ISHA: There is nothing in our foreseeable plans that calls for us to use this warehouse. It's an unused asset. The rents are nice, but we don't need it$.$ Owning this has nothing to do with our core business.

CAROL: You're right. We don't need this warehouse. But the rents are substantial. And it's likely not worth all that much in a sale. We all know how real estate values are depressed these days.

You understand that this doesn't have to be a debate. A basic analysis of the potential cash flows, using some time value tools, can indicate which decision is best for the firm $($where "best" means the most valuable in terms of money$).$

After some research, you have an estimate for a sale price of the warehouse: $$460,000.$ Your firm will likely get that in one year. The rental cash flows are relevant for six years. Your firm uses a required return of $8\mathrm{.}5\%$ for evaluating capital projects like this.

So which is best? Selling the warehouse or holding onto it for six more years?

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