Question
The Stellar 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
The Stellar 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, Stellar has decided to locate a new factory in the Panama City area. Stellar 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 25 years. Building B: Lease for 25 years with annual lease payments of $70,700 being made at the beginning of the year. Building C: Purchase for $654,700 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $6,820. Rental payments will be received at the end of each year. The Stellar Inc. has no aversion to being a landlord. Click here to view factor tables In which building would you recommend that The Stellar Inc. locate, assuming a 12% 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 Stellar Inc. should locate itself in | select a building Building BBuilding ABuilding C |
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