MBA 620 project 4 financing and investing
Mccormick & Company is considering building a new factory in Largo, Maryland. James Francis, a landowner, is selling a 4.35-acre parcel of industrialcompany. The competing manson5:600,0 00.00 for the land. Mccormick & Company is interested in the land and so is another manufacturingany has made an offer of $2,300,000.00 in cash and $300,000 each year for 15 years for the land$4. 424.000 00 in easy knows it can make an offer to outbid the competitor to obtain the land. So, Mccormick & Company decided to offerNow, the land owner, James Francis, must make a decision between the two competing offers. To make this decision, James should first identify theg a 12 percent (12%portfolios. Let’s help James make his decision by answering the following questions using the templateto the right.1. What is the Future Value (FV) of each offer?2. Based on your Future Value calculations, which offer should James accept?Mccormick & Company has decided in order for the company to have a minimal impact on current casthe form of acommercial meadows, the company will need to borrowseventy percent (70%) Loan to Value (LTV) of the $4,424,000.00 offer in the form of a commercial acquisition and development loan to purchase theland . This means Mccormick & Company will need to make a thirty percent (30%) down payment to secure the commercial acquisition anddevelopment loan. Mccormick & Company is considering three different loan options:Percent Down Amount FinancedLoan B : 10- year loan with a fixed annual interest rate of 4.5 percentLoan C: 15-year loan with a fixed annual interest rate of 5 percentPMI3. How much of the total $4,424,000.00 offer will be financed?4. Which loan will havethe lowest monthly payment?5. Which loan will have the lowest total payback amount?6. Would you recommend Mccormick & Company select the loan with lowest monthly payment or lowest total payment and why?