Landover Corporation is looking for a larger office building to house its expanding operations. It is considering two alternatives. The first is a newly constructed building at a cost of 6 million. It would require only minor modifications to meet Landover's needs, at an estimated cost of 500,000. The second building was constructed in 1910 and is a certified historic structure. It could be purchased for 3 million but would require an additional 4 million in renovations to be suitable for Landover. Use Appendix A and Appendix B. Required: a. Calculate Landover's allowable rehabilitation credit if it chooses to purchase and renovate the certified historic structure, and the after-tax purchase price of the building. Assume Landover would claim the credit ratably over years 0 through 4. Landover uses a 4 percent discount rate to calculate present value. b. Based on your analysis, which building should Landover acquire?
