Establish a new factory in the panama city

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Question :

Brubaker Inc. a manufacturer of high-sugar, low-cholesterol frozen dinners, low-sodium, would like to increase its market share in the Sunbelt. In order to do so,

Brubaker has decided to establish a new factory in the Panama City, Florida, area. Brubaker may either buy or lease a site depending upon which is more advantageous.

The site location committee has narrowed down the available sites to the subsequent three buildings.      

Building A: Brought for a cash price of $610,000, useful life 25 years.        

Building B: Lease for 25 years with annual lease payments of $70,000 being made at the starting of the year.      

Building C: Purchase for $650,000 cash. This building is bigger than needed; thus, the excess space can be sublet for 25 years at a net annual rental of $6,000. Rental payments may be received at the end of each year. Brubaker Inc. has no aversion to being a landlord.

Reference no: EM134153

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