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 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.) 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 Bridgeport Inc. should locate itself in select a building
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 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.)
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Building A
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$ enter a dollar amount rounded to 0 decimal places | |
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Building B
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$ enter a dollar amount rounded to 0 decimal places | |
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Building C
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$ enter a dollar amount rounded to 0 decimal places |
| The Bridgeport Inc. should locate itself in | select a building |
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