BLC Ltd. is a medium-sized UK manufacturing company based in Liverpool. The company is seeking to expand its operations with the establishment of an office block to house the marketing and human resources staff in Manchester.

The company has narrowed the choice to two alternatives with the following net cash flow information being available:

Year	Property 1	Property 2
	£000s	£000s
0	(2,500)	(2,750)
1	1,000	900
2	500	700
3	600	800
4	1,000	600
5	900	700

Items to keep in mind:

The company’s current cost of capital is 10%.