The Guffey Company is a national portable building manufacturer. Its Benton plant will become idle on December 31, 2017. Mary Carter, the corporate controller, has been asked to look at three options regarding the plant: (Click the icon to view the options.) Guffey Company treats all cash flows as if they occur at the end of the year, and uses an after-tax required rate of return of 10%. Guffey is subject to a 30% tax rate on all income, including capital gains. Present Value of $1 table Present Value of Annuity of $1 table Future Value of $1 table Future Value of Annuity of $1 table Read the requirements. Requirement 1. Calculate net present value of each of the options and determine which option Guffey should select using the NPV criterion. The net present value of Option 1 is More info Option 1: The plant, which has been fully depreciated for tax purposes, can be sold immediately for $720,000. Option 2: The plant can be leased to the Timber Corporation, one of Guffey's suppliers, for 4 years. Under the lease terms, Timber would pay Guffey $172,000 rent per year (payable at year-end) and would grant Guffey a $58,000 annual discount from the normal price of lumber purchased by Guffey. (Assume that the discount is received at year-end for each of the 4 years.) Timber would bear all of the plant's ownership costs. Guffey expects to sell this plant for $300,000 at the end of the 4-year lease. Option 3: The plant could be used for 4 years to make porch swings as an accessory to be sold with a portable building. Fixed overhead costs (a cash outflow) before any equipment upgrades are estimated to be $30,000 annually for the 4-year period. The swings are expected to sell for $40 each. Variable cost per unit is expected to be $24. The following production and sales of swings are expected: 2018, 20,000 units; 2019, 26,000 units; 2020, 22,000 units; 2021, 18,000 units. In order to manufacture the swings, some of the plant equipment would need to be upgraded at an immediate cost of $200,000. The equipment would be depreciated using the straight-line depreciation method and zero terminal disposal value over the 4 years it would be in use. Because of the equipment upgrades, Guffey could sell the plant for $310,000 at the end of 4 years. No change in working capital would be required. Requirements 1. Calculate net present value of each of the options and determine which option Guffey should select using the NPV criterion. 2. What nonfinancial factors should Guffey consider before making its choice