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

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 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

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