Business, 11.03.2022 08:00 ICAMARON632

The Headland 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, Headland has decided to locate a new factory in the Panama City area. Headland 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 Headland Inc. has no aversion to being a landlord.

Required:
In which building would you recommend that The Headland Inc. locate, assuming a 10% cost of funds?

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The Headland Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like t...

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