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hello, I need help with Building B and C. Thank you. The Shamrock inc, a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to
hello, I need help with Building B and C. Thank you.
The Shamrock 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, Shamrock has decided to locate a new factory in the Panama City area, Shamrock 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 $618,100, useful life 26 years. Building B: Lease for 26 years with annual lease payments of $70,340 being made at the beginning of the year. Bullding C: Purchase for $653,200 cash. This building is larger than needed; however, the exces5 space can be sublet for 26 years at a net annual rental of $6,540. Rental payments will be received at the end of each year. The Shamrock Inc. has no aversion to being a landlord. Click here to view factor tables. In which buliding would you recommend that The Shamrock Inc. locate, assuming a 12% cost of funds? (Round factor values to 5 decimal places, es. 1.25124 and final answer to 0 decimal places, eg. 458,581.) Step by Step Solution
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