Miranda Inc. The Montreal Distribution Centre Decision

Miranda Inc. was Canada's largest national food service, serving restaurants, cafeterias, hotels, hospitals, and fast food chains. Miranda Inc. has several distribution centres and has decided to reduce its network of nine centres to five, strategically located to minimize delivery time and improve responsiveness. This resulted in the need for a second Montreal facility. The choice was narrowed to two options: a 20-year rent option, or a lease-buy back option. The vice-president of logistics had to present his recommendation to the board of directors within the week. To do this, he must analyse the options using the appropriate taxation treatment considering the use of an appropriate discount rate, the political and cultural factors and the appropriateness of some proposed cash flows.