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FINANCE / ACCOUNTING / 8-35 An oil company plans to purchase a piece of vacant land on the corner of two busy streets for $70,000.
FINANCE / ACCOUNTING /
8-35 An oil company plans to purchase a piece of vacant land on the corner of two busy streets for $70,000. On properties of this type, the company installs busi- nesses of three different types. Each has an estimated useful life of 15 years. The salvage land for each is estimated to be the $70,000 land cost. Net Annual Income Plan Cost* Type of Business $ 75,000 Conventional $23,300 gas station B 230,000 44,300 Add automatic carwash Add quick carwash 130,000 27,500 Improvements cost does not include $70,000 for the land. (a) Construct a choice table for interest rates from 0% to 100%. (b) If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected
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