ACC/421 Intermediated Accounting 1 week 5

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Exercise 6-12 The Oriole 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, Oriole has decided to locate a new factory in the Panama City area. Oriole 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 $612,000, useful life 26 years. Building B: Lease for 26 years with annual lease payments of $71,630 being made at the beginning of the year. Building C: Purchase for $653,300 cash. This building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $6,080. Rental payments will be received at the end of each year. The Oriole Inc. has no aversion to being a landlord. Click here to view factor tables In which building would you recommend that The Oriole Inc. locate, assuming a 10% cost of funds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Building A Building B Building C Net Present Value $ $ $ The Oriole Inc. should locate itself in Don't show me this message again for the assignment