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Majestic Enterprises, Inc. is evaluating alternative uses for a manufacturing and warehousing building that is has purchased for $150,000 and is...

Majestic Enterprises, Inc. is evaluating alternative uses for a manufacturing and warehousing building that is has purchased for $150,000 and is currently fully depreciated. The company could continue to rent the building to the present occupants for $15,000 per year. These tenants have indicated an interest in staying in the building for at least another 10 years. Alternatively, the company could make leasehold improvements to modify the existing structure to use for its own manufacturing and warehousing needs. Majestic's production engineer feels the building could be adapted to handle one of two new product lines. The cost and revenue data for the two product alternatives follow.

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