In which building would you recommend that The Metlock Inc. locate, assuming a 12% cost of funds? (Round factor values to 5 decimalplaces, eg. 1.25124 and final answer to O decimal places, eg. 458,581.)Net Present ValueBuilding A$4Building B%24Building C24The Metlock Inc. should locate itself in The Metlock Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in theSunbelt. In order to do so, Metlock has decided to locate a new factory in the Panama City area, Metlock will either buy or lease a sitedepending upon which is more advantageous. The site location committee has narrowed down the available sites to the followingthree very similar buildings that will meet their needs.Building A: Purchase for a cash price of $ 610,600, useful life 27 years.Building B: Lease for 27 years with annual lease payments of $ 70,870 being made at the beginning of the year.Building C: Purchase for $ 657,200 cash. This building is larger than needed; however, the excess space can be sublet for 27 years at anet annual rental of $ 6,110. Rental payments will be received at the end of each year. The Metlock Inc. has no aversion to being alandlord.

Net Present Value=(Present Value of Cash Inflows-Present Value of Cash Outflows)

Answered: The Metlock Inc., a manufacturer of…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 2CDQ

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