Current Attempt in Progress Windsor Inc., manufactures ice tea and would like to increase its market share in the North. In order to do so, Windsor has decided to locate a new factory in the Cedar Rapid area. Windsor 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 $1,547,000, useful life 27 years. Building B: Lease for 27 years with annual lease payments of $126,000 being made at the beginning of the year. Building C: Purchase for $1,958,000 cash. This building is larger than needed; however, the excess space can be sublet for 27 years at a net annual rental of $19,300. Rental payments will be received at the end of each year. Windsor Inc. has no aversion to being a landlord. Click here to view factor tables In which building would you recommend that Windsor Inc. locate, assuming a 12% cost of funds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 4,585.81.)

Current Attempt in Progress Windsor Inc., manufactures ice tea and would like to increase its market share in the North. In order to do so, Windsor has decided to locate a new factory in the Cedar Rapid area. Windsor 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 $1,547,000, useful life 27 years. Building B: Lease for 27 years with annual lease payments of $126,000 being made at the beginning of the year. Building C: Purchase for $1,958,000 cash. This building is larger than needed; however, the excess space can be sublet for 27 years at a net annual rental of $19,300. Rental payments will be received at the end of each year. Windsor Inc. has no aversion to being a landlord. Click here to view factor tables In which building would you recommend that Windsor Inc. locate, assuming a 12% cost of funds? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places, e.g. 4,585.81.)

Name: Current Attempt in ProgressWindsor Inc., manufactures ice tea and wou
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Description: Current Attempt in ProgressWindsor Inc., manufactures ice tea and would like to increase its market share in the North. In order to do so, Windsor has decided tolocate a new factory in the Cedar Rapid area. Windsor will either buy or lease a site de

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter26: Capital Budgeting (capbud)

Section: Chapter Questions

Problem 5R

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Metal Recycling and Salvage receives the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site to Enviro at no cost. Enviro intends to extract scrap metal at the site for 24 months and then will clean up the site, return the land to useable condition, and sell it to a developer. Projected costs associated with the project follow: Read the requirements2. Requirement 1. Assuming that Enviro expects to salvage 70,000tons of metal from the site, what is the total project life cycle cost? Total Life-Cycle Costs Variable costs: Metal extraction and processing Fixed costs: Metal extraction and processing Rent on temporary buildings Administration Clean-up Land restoration Selling land Total life-cycle cost Requirement 2. Suppose Enviro can sell the metal for $110 per ton and wants to earn a…
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