Harbourline’s current warehouse lease has four years left at 300,000 a year; breaking it costs 90,000. A new site costs 240,000 a year for four years. Moving costs are 60,000, contribution lost during the transition month is 35,000, and staff retention bonuses are 25,000. Compute the total one-time costs, the annual saving, the total savings over four years, and the net differential (undiscounted).
Harbourline’s current warehouse lease has four years left at 300,000 a year; breaking it costs 90,000. A new site costs 240,000 a year for four years. Moving costs are 60,000, contribution lost during the transition month is 35,000, and staff retention bonuses are 25,000. Compute the total one-time costs, the annual saving, the total savings over four years, and the net differential (undiscounted).
Answer
One-time costs → 210000 · Annual saving → 60000 · Total savings (4 years) → 240000 · Net differential (undiscounted) → 30000
Cells - One-time costs · ±0 - Annual saving · ±0 - Total savings (4 years) · ±0 - Net differential (undiscounted) · ±0 One-time: 90,000 + 60,000 + 35,000 + 25,000 = 210,000. Annual saving 300,000 − 240,000 = 60,000; × 4 = 240,000. Net = 240,000 − 210,000 = +30,000 → move, provisionally. The 1,200,000 of remaining old rent is the cost of staying, not of moving. Discounted at 10 % the savings are worth about 190,000 and the sign flips (Lesson 13.6).
Method from Hermanson Vol 2 ch 22; the caveat from concept map L10 and Hermanson Vol 2 ch 26 (the forward pointer to discounting); the Harbourline relocation is the course’s own and Lesson 13.6 reuses its figures