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Business, 02.10.2019 04:30 ayeheavymetal

The sage 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, sage has decided to locate a new factory in the panama city area. sage 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 $613000, useful life 26 years.
building b: lease for 26 years with annual lease payments of $71950 being made at the beginning of the year.
building c: purchase for $655100 cash. this building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $6900. rental payments will be received at the end of each year. the sage inc. has no aversion to being a landlord. in which building would you recommend that the sage inc. locate, assuming a 12% cost of funds?

net present value

building a $

building b $

building c$

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The sage inc., a manufacturer of low-sugar, low-sodium, low-cholesterol tv dinners, would like to in...

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