Committee has narrowed down the available sites

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Teal Mountain Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in Western Canada. In order to do so, Teal Mountain has decided to locate a new factory in Kelowna, B.C. Teal Mountain 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 buildings.

Building A: Purchase for a cash price of $625,000, useful life 25 years.

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

Building C: Purchase for $670,000 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $7,100. Rental payments will be received at the end of each year. Teal Mountain Inc. has no aversion to being a landlord.

Reference no: EM132421226

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