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The Novak Inc., a manufacturer of low - sugar, low - sodium, low - cholesterol TV dinners, would like to increase its market share in

The Novak 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, Novak has decided to locate a new factory in the Panama City area. Novak 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 $618,300, useful life 27 years.
Building B: Lease for 27 years with annual lease payments of $71,360 being made at the beginning of the year.
Building C: Purchase for $651,500 cash. This building is larger than needed; however, the excess space can be sublet for 27 years at a net annual rental of $6,090. Rental payments will be received at the end of each year. The Novak Inc. has no aversion to being a landlord.
Click here to view factor tables.
In which building would you recommend that The Novak Inc. locate, assuming a 11% cost of funds? (Round factorr 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 Novak Inc. should locate itself in
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