Professional Properties Is Considering Remodeling the Office Building It Leases

Multiple Choice

Professional Properties is considering remodeling the office building it leases to Heartland Insurance.The remodeling costs are estimated at $3.4 million.If the building is remodeled,Heartland Insurance has agreed to pay an additional $820,000 a year in rent for the next five years.The discount rate is 15 percent.What is the benefit of the remodeling project to Professional Properties?

A) -$651,233
B) -$489,072
C) $5,214
D) $128,399
E) $311,417