XYZ Ltd. is a multinational that wants to open a new factory in Barcelona.

Two alternatives are offered by the owner of the property where they want to install the company.

Option A: Renting a plant with a perpetual contract, meaning for ever and ever. In this case, the company has to pay 4,000 per month and the contract contains a clause stating that the rent price will be growing at a 0.08% monthly.

Option B: Acquiring the plant with a mortgage scheme for 50 years. The current ownership is demanding an initial payment of 1,500,000 and a monthly amount of 2,500 .

The interest applicable rates are around 3% compounded yearly, this is supposed to be the market rate for this type of activities.

1) In terms of Finance, what is the difference between Option A and Option B? (10 points)