Griffin Dewatering is considering three alternatives. The first is the purchase of a permanent steel building to house their existing equipment for the overhaul of dewatering systems (engines, pumps, and well points). The building can be put into service for \($240,000\) in early January of this year. The planning horizon for this is 10 years, at which time the building can be sold for \($120,000\) in lateDecember.Maintenance and upkeep of the equipment, plus labor and materials for overhaul, costs \($130,000\) per year.A second alternative is to lease a building for \($15,000\) per year at the beginning of each year, in which case all operating costs are identical except for an additional \($4,000\) per year cost due to the inconvenient location of the lease property. Third, they could simply contract out the overhaul work for \($170,000\) per end-of-year, with an immediate credit through salvage of their present equipment for \($45,000.\) Marginal taxes are 40 percent, and the after-tax MARR is 12 percent.

a. Determine the annual worth associated with buying the building. Be sure to give the appropriate MACRS-GDS property class.

b. Determine the annual worth of leasing.

c. Determine the annual worth of contracting out the work.

d. Determine the annual contract price that makes contracting and leasing economically equivalent.