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Windsor, Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in Western Canada. In order to do so, Windsor has decided to locate a new factory in Kelowna, B.C. Windsor will either buy or lease a site, depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three buildings. Building A: Purchase for a cash price of $630,000, useful life 25 years. Building B: Lease for 25 years with annual lease payments of $71,000 being made at the beginning of the year. Building C: Purchase for $685,000 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $8,000. Rental payments will be received at the end of each year. Windsor, Inc. has no aversion to being a landlord. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Calculate the net present value of three buildings, assuming a 12% cost of funds. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answers to o decimal places, e.g. 5,275.) Net present value Building A S Building B 5 Building C s In which building would you recommend that Windsor, Inc. locate? Windsor, Inc. should locate itself in Sage Hill Inc. manufactures cycling equipment. Recently, the company's vice-president of operations has requested construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $2,160,000 of 13% term corporate bonds on March 1, 2020, due on March 1, 2034, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 12%. As Sage Hill's controller, determine the selling price of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Selling price of the bonds s LINK TO TEXT What is the basis of measurement for the bonds? The bonds are reported a cost. amortized historical LINK TO TEXT Is there any measurement uncertainty that requires disclosure in Sage Hill's financial statement notes
