The Headland 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, Headland has decided to locate a new factory in the Panama City area. Headland 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 $610,000, useful life27years.

Building B: Lease for27years with annual lease payments of $70,500being made at the beginning of the year.

Building C: Purchase for $656,700cash. This building is larger than needed; however, the excess space can be sublet for27years at a net annual rental of $6,570. Rental payments will be received at the end of each year. The Headland Inc. has no aversion to being a landlord.

In which building would you recommend that The Headland Inc. locate, assuming a10% 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.)

Net Present Value

Building A

$

enter a dollar amount rounded to 0 decimal places

Building B

$

enter a dollar amount rounded to 0 decimal places

Building C

$

enter a dollar amount rounded to 0 decimal places

The Headland Inc. should locate itself in

select a building