Question
The Tamarisk 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 Tamarisk 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, Tamarisk has decided to locate a new factory in the Panama City area. Tamarisk 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 $ 619,800, useful life 26 years. Building B: Lease for 26 years with annual lease payments of $ 71,730 being made at the beginning of the year. Building C: Purchase for $ 650,100 cash. This building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $ 6,810. Rental payments will be received at the end of each year. The Tamarisk Inc. has no aversion to being a landlord. Click here to view factor tables In which building would you recommend that The Tamarisk Inc. locate, assuming a 11% 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 Tamarisk Inc. should locate itself in | select a building Building BBuilding ABuilding C |
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