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2 The Vaughn Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to
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The Vaughn Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Vaughn has decided to locate a new factory in the Panama City area. Vaughn 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 very similar buildings that will meet their needs. Building A: Purchase for a cash price of $617800, useful life 26 years Building B: Lease for 26 years with annual lease payments of $71870 being made at the beginning of the year Building C: Purchase for $650400 cash. This building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $6980. Rental payments will be received at the end of each year. The Vaughn Inc. has no aversion to being a landlord. Click here to view factor tables In which building would you recommend that The Vaughn Inc. locate, assuming a 10 % cost of funds? (Round foctor values to 5 decimal places, es. 1.25124 and final answer to 0 decimal places, eg 458,581) Net Present Value Building A $ Building B S Building C The Vaughn Inc. should locate itself in Step by Step Solution
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