An oil company plans to purchase a piece of vacan1 land on the comer of two busy streets for $70,000. On properties of this type, the company installs businesses of four different types.

*Cost of improvements does not include the $70,000 cost of land.
In each case, the estimated useful life of the improvements is 15 years. The salvage value for each is estimated to be the $70,000 cost of the land. The net annual income, after paying all operating expenses, is projected as follows:
PlanNet Annual Income
A.....................$23,300
B......................44,300
C......................10,000
D.....................27,500
If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected?

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Cost of Plan mprovemnts Type of Business 75,000 Coventional gas station with service facilities for lubrication, oi changes etc 230,000 Automatic carwash ity with gasoline pump island in front 30,000 Discount gas station no service bays) 130,000 station with low-cost, quick-carwash facility