A company Board of Directors is deciding whether they should invest in a new factory between the two locations below.

The first new factory will be located in the southern region. This initiative will put the company in the right position to become an industry leader in production. The initial investment of the project is $5,500,000 and the project is expected to have a lifetime of 10 years. The factory monthly spending of $200,000 is charged for agency service and competitor data during the project. The new factory initiative is projected to bring a fixed revenue of $2,500,000 per year for the first 3 years and from the fourth year onwards it increases $200,000 per year until the end of the project.

The factory expansion initiative will rely on its existing factory located in northern region. This initiative will help the company increase its production capacity and the initial cost of this project is estimated at $4,300,000 with no further monthly cost. This project is expected to last for 10 years and generate sales of $2,000,000 per year for the first three years and from the fourth year onwards it increases $350,000 per year until the end of its lifetime.

Question: Determine and justify the opportunity cost for both initiatives and decide which one should you choose?