The Marin 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, Marin has decided to locate a new factory in the Panama City area. Marin 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 $616,000, useful life 26 years. Building B: Lease for 26 years with annual lease payments of $70,880 being made at the beginning of the year. Building C: Purchase for $650,600 cash. This building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $6,110. Rental payments will be received at the end of each year. The Marin Inc. has no aversion to being a landlord. In which building would you recommend that The Marin 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.)
Net Present Value Building A Building B Building C The Marin Inc. should locate itself in Table 6.1 FUTURE VALUE OF 1 (FUTURE VALUE OF A SINGLE SUM) FVF (1+ i" (n) Periods 2% 2% % 3% 4% 5% 6% 1.02000 1.02500 1.03000 1.04000 105000 1.06000 1.04040 1.05063 1.06090 1.08160 1.10250 1.12360 1.06121 1,07689 1.09273 1.12486 1.15763 1.19102 1.08243 1.10381 1.16986 1.21551 1.26248 4 1.12551 1.10408 121665 1.27628 1.33823 1.13141 1.15927 1.12616 1.1940S 1.26532 1.34010 1.41852 6 1.15969 1.14869 1.18869 1.22987 1.31593 40710 1.50363 1.26677 1.17166 1.21840 1.36857 147746 1.59385 1.19509 124886 1.30477 142331 1.55133 1.68948 121899 1.28008 1.34392 1.48024 1.62889 1.79085 10 1.24337 1.31209 1.38423 1.53945 1.71034 1.89830 11 12 1.26824 1.34489 142576 1.60103 1.79586 2.01220 13 1.29361 1.37851 1.46853 166507 188565 2.13293 1.31948 1.51259 1.73168 1.97993 2.26090 14 1.41297 1.34587 144830 1.55797 1.80094 2.07893 2.39656 15 1.37279 1.48451 1.60471 1.87298 2.18287 2.54035 16 17 1.40024 152162 1.65285 1.94790 2.29202 2.69277 18 1.42825 1.70243 2.02582 2.40662 2.85434 1.55966 19 145681 1.59865 2.10685 2.52695 3.02560 1,75351 14859S 1.63862 1.80611 2.19112 2.65330 3.20714 20 21 186029 2.27877 2.78596 3.39956 151567 1.67958 22 1.54598 172157 1.91610 2.36992 2.92526 3.60354 23 1.57690 1,76461 1.97359 2.46472 3.07152 3.8197S 24 1.60844 1.80873 2.03279 2.56330 3.22510 4.04893 25 1.85394 2.09378 2.66584 3.38635 4.29187 1.64061 26 1.67342 1.90029 2.15659 2.77247 3.55567 4.54938 8% 9% 10% 12% 11% 15% (n) Periods 1.08000 1,09000 1.10000 1.11000 1.12000 1.15000 1.16640 1.18810 1.21000 1.23210 1.25440 1.32250 125971 129503 1.33100 1.36763 140493 1.52088 136049 1.41158 146410 1.51807 1.57352 1.74901 1.46933 1.53862 1.61051 1.76234 2.01136 1.68506 1.58687 1.67710 1.87041 1.97382 2.31306 1,77156 6 1,71382 1.82804 1.94872 2.07616 2.21068 2.66002 185093 1.99256 2.14359 2.30454 2.47596 3.05902 1.99900 2.17189 2.35795 2.55803 2.77308 3.51788 2.15892 2.36736 2.59374 2.83942 3.10585 4.04556 10 2.33164 2.58043 2.85312 3.15176 3.47855 4.65239 11 2.51817 2.81267 3.13843 3.4984S 3.89598 5.35025 12 2.71962 3.06581 3.45227 3.88328 4.36349 6.15279 13 2.93719 3.34173 3.79750 4.31044 4.88711 7.07571 14 3.17217 3.64248 4.17725 4.78459 5.47357 8.13706 15 3.42594 3.97031 4.59497 5.31089 6.13039 9.35762 16 3.70002 4.32763 5.05447 5.89509 6.86604 10.76126 17 ,99602 5.55992 6.54355 7,68997 12.37545 4.71712 18 7.26334 4.31570 5.14166 6.11591 8.61276 14.23177 19 16.36654 4,66096 5.60441 6.72750 8,06231 9.64629 20 5.03383 6.10881 7.40025 8.94917 10.80385 18.82152 21 543654 6.65860 8.14028 9.93357 12.10031 21.64475 22 5.87146 7.25787 8.95430 11.02627 13.55235 24.89146 23 7.91108 9.84973 12.23916 15.17863 24 6.34118 28.62518 6.84847 8.62308 10.83471 13.58546 17.00000 32.91895 25 7.39635 9.39916 11.91818 15.07986 19.04007 37.85680 26 7.98806 10.24508 13.10999 16.73865 21.32488 43.53532 27 8.62711 11.16714 14.42099 18.57990 23.88387 S0.06561 28 Table 6.2 PRESENT VALUE OF 1 (PRESENT VALUE OF A SINGLE SUM) PVFs 1+0 (1 + 2% 24% 3% 4% 6% (n) Periods 5% 98039 .97561 .97087 .96154 .95238 94340 1 2 96117 .95181.94260 .92456 .90703 89000 94232 92860 91514 88900 86384 83962 92385 .90595 88849 85480 82270 .79209 4 90573 88385 86261 82193 78353 74726 88797 86230 83748 79031 74622 70496 87056 84127 81309 .75992 71068 66506 8 85349 82075 78941 73069 67684 62741 83676 80073 76642 70259 .64461 S9190 82035 78120 .74409 67556 61391 10 $5839 11 80426 76214 .72242 64958 58468 S2679 12 78849 74356 .70138 62460 55684 49697 13 .77303 72542 68095 60057 53032 46884 75788 70773 66112 57748 50507 44230 14 74301 69047 64186 55526 48102 41727 15 16 72845 67362 .62317 53391 45811 39365 17 71416 65720 .60502 51337 43630 37136 70016 64117 58739 49363 41552 35034 18 19 68643 6253 57029 47464 39573 33051 20 67297 61027 S5368 45639 37689 31180 21 65978 59539 53755 43883 35894 29416 22 .64684 58086 52189 42196 34185 27751 23 63416 56670 50669 40573 32557 26180 24 62172 55288 49193 39012 31007 24698 25 60953 53939 47761 37512 .29530 23300 26 59758 52623 46369 36069 ,28124 21981 9% 12% 8% 10% 11% 15% (n) Periods 92593 91743 90909 .90090 89286 86957 85734 84168 82645 81162 79719 75614 2 79383 77218 75132 73119 71178 65752 73503 70843 68301 65873 63552 57175 .68058 64993 62092 59345 56743 49718 .63017 59627 56447 53464 50663 43233 58349 S4703 51316 48166 45235 37594 54027 50187 46651 43393 40388 32690 50025 46043 42410 39092 36061 28426 46319 42241 38554 35218 32197 24719 10 42888 38753 35049 31728 .28748 21494 11 25668 18691 39711 35554 31863 28584 12 36770 32618 .28966 .25751 22917 16253 13 34046 .29925 .26333 23199 .20462 14133 14 31524 .27454 .23939 .20900 .18270 12289 15 29189 25187 .21763 18829 16312 10687 16 27027 .23107 19785 16963 14564 09293 17 25025 21199 17986 15282 13004 08081 18 23171 19449 16351 13768 11611 07027 19 21455 17843 14864 .12403 10367 06110 20 19866 16370 13513 11174 .09256 05313 21 18394 15018 12285 10067 .08264 .04620 22 17032 13778 1116809069 07379 04017 23 15770 12641 10153 08170 06588 03493 24 14602 11597 .09230 .07361 .05882 .03038 25 13520 10639 .083906631 05252 02642 26 12519 09761 07628 05974 04689 02297 27 11591 0895S 06934 05382 04187 01997 28 Table 6.3 FUTURE VALUE OF AN ORDINARY ANNUITY OF 1 1+-1 FVF-OA = 2% 2%% 3% 4% 5% 6% (n) Periods 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 2 2.02000 2.02500 2,03000 2,04000 2,05000 2,06000 3.06040 3,07563 3.09090 3.12160 3.15250 3.18360 4.12161 4.15252 4.18363 4.24646 4.31013 4.37462 5.20404 S.25633 5.30914 S.41632 5.52563 5.63709 6.30812 6.38774 6.46841 6.63298 6.8019 6.97532 7 7,43428 7.54743 7.66246 7,89829 8.14201 8.39384 8.58297 8.73612 8.89234 9.21423 9.54911 9.89747 9.75463 9.95452 10.15911 10.58280 11.02656 11,49132 10 10.94972 11.20338 11.46338 12.00611 12.57789 13.18079 11 12.16872 12.48347 12.80780 13.48635 14.20679 14.97164 12 13.41209 13.79555 14.19203 15.02581 15.91713 16.86994 13 15.14044 15.61779 16.62684 17.71298 18.88214 14.68033 5.97394 16.51895 17.08632 18.2919 19.59863 21.01507 14 17.29342 17.93193 18.59891 20.02359 21.57856 23.27597 15 16 18.63929 19.38022 20.15688 21.82453 23.65749 25.67253 17 20.01207 20.86473 21.76159 23.69751 25.84037 28.21288 18 21.41231 22.38635 23.41444 25.64541 28.13238 30.90565 30.53900 19 22.84056 23.94601 25.11687 27.67123 33.75999 20 24.29737 25.54466 26.87037 29.77808 33.06595 36,78559 21 25.78332 27.18327 28.67649 31.96920 35.71925 39.99273 22 27.29898 28.86286 30.53678 34,24797 38.50521 43.39229 23 28.84496 30.58443 32.45288 36,61789 46.99583 41.43048 24 30.42186 32.34904 34.42647 39,08260 50,81558 44,50200 25 32.03030 34.15776 36.45926 41.64591 47.72710 54.8645 26 33.67091 36.01171 38.55304 44.31174 51.11345 59.15638 8% 9% 10% 12% 11% 15% (n) Periods 1.00000 1.00000 1,00000 1,00000 1.00000 1,00000 2,08000 2.10000 2.11000 2.12000 2.15000 2 2,09000 3.37440 3.24640 3.27810 3.31000 3.34210 3.47250 4.50611 4,57313 4,64100 4.70973 4.77933 4.99338 4 5.86660 5.98471 6.10510 6.22780 6.35285 6.74238 7,33592 7.52334 7,71561 7.91286 8.11519 8.75374 6 8.92280 9.48717 9.78327 10.08901 11.06680 9.20044 10.63663 11.02847 11.43589 11.85943 12.29969 13.72682 12.48756 13.02104 13.57948 14.16397 14.77566 16.78584 15.19293 15.93743 20.30372 10 14,48656 16.72201 17.54874 18.53117 19.56143 20.65458 24.34928 11 16.64549 17.56029 29.00167 18.97713 20.14072 21.38428 22.71319 24.13313 12 21.49530 22.95339 24.52271 26.21164 28.02911 34.35192 13 24.21492 26.01919 27.97498 30,09492 32.39260 40.50471 14 27.15211 29.36092 31.77248 34.40536 37.27972 47.58041 15 30.32428 33.00340 35.94973 39.18995 42.75328 16 55.71747 65.07509 33.75023 36.97371 40.54470 44.50084 48.88367 17 37,45024 45.59917 50.39593 S5.74972 75.83636 18 41.30134 46.01846 51.15909 56.93949 63.43968 88.21181 19 41.44626 45,76196 51.16012 57.27500 64.20283 72.05244 102.44358 20 50.42292 64.00250 72.26514 81.69874 118.81012 21 56.76453 55.45676 62.87334 71.40275 81.21431 92.50258 137.63164 22 60.89330 69.53194 79.54302 91.14788 104.60289 159,27638 23 184.16784 66.76476 76.78981 88.49733 102.17415 118.15524 24 73.10594 84,70090 98.34706 114.41331 133.33387 212.79302 25 79,95442 93.32398 109.18177 127.99877 150.33393 245.71197 26 Table 6.4 PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 1- 1+ PVF-OA (n) Periods 2% 2%% 3% 4% 5% 6% 98039 97561 97087 96154 95238 94340 1.94156 1.92742 1.91347 1.88609 .83339 1.85941 2.88388 2.85602 2.8286 2.77509 2 72325 2.67301 3.80773 3.76197 3.71710 3.62990 3.54595 3.46511 4 4.71346 4.64583 4,57971 4.45182 4.32948 4.21236 5.60143 5.50813 5.41719 5.24214 5.07569 4.91732 6 6.47199 6.34939 6.23028 6.00205 5.78637 5.58238 6.20979 7.32548 7.01969 6.73274 6.46321 7.17014 8.16224 7,97087 7.78611 7.43533 7.10782 6.80169 10 8.98259 8.75206 8.53020 8.11090 7.72173 7.36009 9.78685 9.51421 9.25262 8.76048 8.30641 7.88687 11 12 10.57534 10.25776 9.95400 9.38507 8.86325 8.38384 13 11.34837 10.98319 10.63496 9.98565 9.39357 8.85268 14 12.10625 11.69091 11.29607 10.56312 9.89864 9.29498 12.84926 12.38138 11.93794 11.11839 10.37966 9.71225 15 13.57771 13.05500 12.56110 11.65230 10.83777 10.10590 16 17 14.29187 13.71220 13.16612 12.16567 11.27407 10.47726 10.82760 18 14.99203 14.35336 13.75351 12.65930 11.68959 15.67846 14.97889 14.32380 13.13394 12.08532 19 11.15812 20 16.35143 15.58916 14.87747 13.59033 12.46221 11.46992 21 17.01121 16.18455 15.41502 14.02916 12.82115 11.76408 12.04158 22 17.65805 16.76541 15.93692 14.45112 13.16300 23 18.29220 17,33211 16.44361 14.85684 13.48857 12.30338 24 18.91393 17.88499 16.93554 15.24696 13.79864 12.55036 19.52346 18.42438 17.41315 15.62208 14.09394 12.78336 25 26 20.12104 18.95061 17.87684 15.98277 14.37519 13.00317 9% 12% 8% 10% 11% 15% (n) Periods 92593 91743 90909 90090 89286 86957 1,78326 1.75911 1.73554 1.71252 1.6900S 1.62571 2.57710 2.53130 2,48685 2,44371 2.40183 2.28323 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 4 3.99271 3.88965 3.79079 3.69590 3,60478 3.35216 4.62288 4.48592 4.35526 4,23054 3.78448 4.11141 5.20637 5.03295 4.86842 4.71220 4.16042 4.56376 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 6.24689 5.99525 5.75902 5.53705 5.32825 4.77158 6.71008 6.41766 6.14457 5.88923 5.65022 5.01877 10 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 11 7.53608 7.16073 6.81369 6.49236 6.19437 5.42062 12 7,90378 7.48690 7.10336 6.74987 6.42355 5.58315 13 8.24424 7.78615 7.36669 6.98187 6.62817 5.72448 14 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 15 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424 16 9.12164 8.54363 8,02155 7.54879 7.11963 6.04716 17 9.37189 8.75563 8.20141 7.70162 7.24967 6.12797 18 9.60360 8.95012 8.36492 7.83929 7.36578 6.19823 19 9.81815 9.12855 8.51356 7.96333 7.46944 6.25933 20 10.01680 9.29224 8.64869 8,07507 7.56200 6.31246 21 10.20074 944243 8.77154 8.17574 6.35866 22 7.64465 10.37106 9.58021 8.88322 8.26643 7.71843 6.39884 23 10.52876 9.70661 8.98474 8.34814 7.78432 6.43377 24 10.67478 9.82258 9.07704 8.42174 7.84314 6.46415 24 10.80998 9.92897 9.16095 8.48806 7.89566 6.49056 26 10.93516 10.02658 9.23722 8.54780 7.94255 6.51353 27 11.05108 10.11613 9.30657 8.60162 7.98442 6.53351 28 Table 6.5 PRESENT VALUE OF AN ANNUITY DUE OF 1 1- (14-1 PVF-AD 1+ (n) Periods 2% 2% % 3% 4% 5% 6% 1.00000 1.00000 1.00000 100000 1.00000 1.00000 1.95238 1.98039 1.97561 197087 1.96154 1.94340 2.94156 2.92742 2.91347 2.88609 2.85941 2.83339 3.88388 3.85602 3.82861 3.77509 3,72325 3.67301 4 4.80773 4.76197 4,62990 4.54595 4,46511 4.71710 5.5797 5.71346 5.45182 5.32948 5.21236 6 5.64583 6.60143 6.50813 6.24214 6.07569 5.91732 6.41719 747199 7.34939 7.23028 7.00205 6.78637 6.58238 8.32548 8.17014 8,01969 7.73274 7,46321 7.20979 9.16224 8.97087 8.78611 8.43533 8.10782 7.80169 10 9.98259 9.75206 9.53020 9.11090 8.72173 8.36009 11 12 10.78685 10.51421 10.25262 9.76048 9.30641 8.88687 13 11.57534 11.25776 10.95400 10.38507 9.86325 9.38384 12.34837 11.98319 11.63496 10.98565 10.39357 9.85268 14 13.10625 12.69091 12.29607 11.56312 10.89864 10.29498 15 13.84926 13.38138 12.93794 12.11839 11.37966 10.71225 16 14.57771 14.05500 13.56110 12.65230 11.83777 11.10590 17 18 15.29187 14.71220 14.16612 13.16567 12.27407 11.47726 19 15.99203 15.35336 14.75351 13.65930 12.68959 11.82760 20 16.67846 15.97889 15.32380 14.13394 13.08532 12.15812 21 17.35143 16.58916 15.87747 14.59033 13.46221 12.46992 22 18.01121 17.18455 16.41502 15.02916 13.82115 12.76408 23 18.65805 17.76541 16.93692 15.45112 14.16300 13.04158 24 19.29220 18.33211 17.44361 15.85684 14.48857 13.30338 25 19.91393 18.88499 17.93554 16.24696 14.79864 13.55036 26 20.52346 19.42438 18.41315 16.62208 15.09394 13.78336 9% 10% (n) Periods 8% 11% 12% 15% 1,00000 1.00000 1.00000 1.00000 1.00000 1.00000 1 1.92593 1.91743 1.90909 1.90090 1.89286 1.86957 2.78326 2.75911 2.73554 2.71252 2,69005 2.62571 3.57710 3.53130 3.48685 3.44371 3.40183 3.28323 4,31213 4.23972 4.16986 4.10245 4.03735 3.85498 4.99271 4.88965 4.79079 4,69590 4,60478 4.35216 5,62288 548592 5.35526 5.23054 4.78448 7 5.11141 6.20637 6.03295 5.86842 5.71220 5.56376 5.16042 6.53482 6.33493 6.14612 5.96764 5.48732 6.74664 7.24689 6,99525 6.75902 6.53705 6.32825 5.77158 10 7.71008 7.41766 6.88923 6,65022 6.01877 7.14457 11 8.13896 7.80519 7.49506 7.20652 6.93770 6.23371 12 8.53608 8.16073 7.81369 7.49236 7.19437 6.42062 13 8.90378 8.48690 8.10336 7,74987 7.42355 14 6.58315 9.24424 8,78615 8.36669 7.98187 7,62817 6.72448 14 9.55948 9.06069 8.60608 8.19087 7.81086 6.84737 16 9.85137 9.31256 8.82371 8.37916 7.97399 6.95424 17 10.12164 9.54363 9.02155 8.54879 8.11963 7.04716 18 10.37189 9.75563 9.20141 8.70162 8.24967 7.12797 19 10.60360 9.95012 9.36492 8.83929 8.36578 7.19823 20 10.81815 10.12855 9.51356 8,96333 8.46944 7.25933 21 11.01680 10.29224 9.64869 9,07507 8.56200 7.31246 22 11.20074 10.44243 9.77154 9.17574 8.6446S 7.35866 23 11.37106, 10.58021 9.88322 9.26643 8,71843 7.39884 24 11.52876 10.70661 9.98474 9.34814 8.78432 7.43377 25 11.67478 10.82258 10.07704 9.42174 8,84314 26 7.46415
