Brubaker Inc., a manufacturer of high

$-$

sugar, low

$-$

sodium, low

$-$

cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so

$,$

$$Brubaker has decided to locate a new factory in the Panama City area. Brubaker 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 $

$6$

$1$

$0$

$,$

$0$

$0$

$0$

$,$

$$useful life

$2$

$5$

$$years$.$

Building B: Lease for

$2$

$5$

$$years with annual lease payments of $

$7$

$0$

$,$

$0$

$0$

$0$

$$being made at the beginning of the year.

Building C: Purchase for $

$6$

$5$

$0$

$,$

$0$

$0$

$0$

$$cash$.$ This building is larger than needed; however, the excess space can be sublet for

$2$

$5$

$$years at a net annual rental of $

$6$

$,$

$0$

$0$

$0$

$.$

$$Rental payments will be received at the end of each year. The Brubaker Inc. has no aversion to being a landlord.

In which building would you recommend that Brubaker Inc. locate, assuming a

$1$

$2$

$\%$

$$cost of funds?

$($

Show me your work!

$)$