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:

Plan              Net 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?

Cost of Plan Improvements. Type of Business $ 75,000 A Conventional gas station with service facilities for lubrication oil changes, etc. Automatic carwash facility with gasoline pump 230.000 Island in front 30,000 Discount gas station (no service bays) D 130,000 Gas station with low-cost, quick-carwash facility