The Bridgeport 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, Bridgeport has decided to locate a new factory in the Panama City area. Bridgeport 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 $611,000, useful life 25 years. Building B: Lease for 25 years with annual lease payments of $71,370 being made at the beginning of the year. Building C: Purchase for $657,400 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $6,800. Rental payments will be received at the end of each year. The Bridgeport Inc. has no aversion to being a landlord. Click here to view factor tables. In which building would you recommend that The Bridgeport 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.)

The Bridgeport 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, Bridgeport has decided to locate a new factory in the Panama City area. Bridgeport 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 $611,000, useful life 25 years. Building B: Lease for 25 years with annual lease payments of $71,370 being made at the beginning of the year. Building C: Purchase for $657,400 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $6,800. Rental payments will be received at the end of each year. The Bridgeport Inc. has no aversion to being a landlord. Click here to view factor tables. In which building would you recommend that The Bridgeport 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.)

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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The Bridgeport 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, Bridgeport has decided to locate a new factory in the Panama City area. Bridgeport 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 $ 615,000, useful life 28 years.Building B: Lease for 28 years with annual lease payments of $ 71,570 being made at the beginning of the year.Building C: Purchase for $ 659,900 cash. This building is larger than needed; however, the excess space can be sublet for 28 years at a net annual rental of $ 6,870. Rental payments will be received at the end of each year. The Bridgeport Inc. has no aversion to being a landlord.Click here to view factor tablesIn which building would you recommend…
The Bridgeport 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, Bridgeport has decided to locate a new factory in the Panama City area. Bridgeport 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 $ 615,000, useful life 28 years.Building B: Lease for 28 years with annual lease payments of $ 71,570 being made at the beginning of the year.Building C: Purchase for $ 659,900 cash. This building is larger than needed; however, the excess space can be sublet for 28 years at a net annual rental of $ 6,870. Rental payments will be received at the end of each year. The Bridgeport Inc. has no aversion to being a landlord.Click here to view factor tablesIn which building would you recommend…
The Sandhill 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, Sandhill has decided to locate a new factory in the Panama City area. Sandhill 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 $612,300, useful life 26 years.Building B: Lease for 26 years with annual lease payments of $70,170 being made at the beginning of the year.Building C: Purchase for $652,900 cash. This building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $6,430. Rental payments will be received at the end of each year. The Sandhill Inc. has no aversion to being a landlord.Click here to view factor tablesIn which building would you recommend that The Sandhill…
The Splish 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, Splish has decided to locate a new factory in the Panama City area. Splish 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 Splish Inc. has no aversion to being a landlord. In which building would you recommend that The Splish Inc. locate, assuming a 12% cost of…
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The Crane 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, Crane has decided to locate a new factory in the Panama City area. Crane 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 life 27 years. Building B: Lease for 27 years with annual lease payments of $70,500 being made at the beginning of the year. Building C: Purchase for $656,700 cash. This building is larger than needed; however, the excess space can be sublet for 27 years at a net annual rental of $6,570. Rental payments will be received at the end of each year. The Crane Inc. has no aversion to being a landlord. Click here to view factor tables. In which building would you recommend that The Crane Inc.…
The Sweet 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, Sweet has decided to locate a new factory in the Panama City area. Sweet 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 $ 615,800, useful life 28 years.Building B: Lease for 28 years with annual lease payments of $ 71,850 being made at the beginning of the year.Building C: Purchase for $ 655,900 cash. This building is larger than needed; however, the excess space can be sublet for 28 years at a net annual rental of $ 6,850. Rental payments will be received at the end of each year. The Sweet Inc. has no aversion to being a landlord.What is the Net Present Value for each alternative. In which building would you recommend…
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The Blossom 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, Blossom has decided to locate a new factory in the Panama City area. Blossom 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 $611,000, useful life 25 years. Building B: Lease for 25 years with annual lease payments of $71,370 being made at the beginning of the year. Building C: Purchase for $657,400 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $6,800. Rental payments will be received at the end of each year. The Blossom Inc. has no aversion to being a landlord. Click here to view factor tables In which building would you recommend that The Blossom…
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