You are interested in investing in a building costing 500,000 for a period of three years. You can either rent out the building as is (Option A) or install an assortment of energy-efficient fittings at an additional cost of 20,000 (Option B). Regardless of the option chosen, assume that a tenant takes immediate occupation, paying an annual rent in arrears. Maintenance expenses and the sale of the building also take place at the end of the year.

	Option A	Option B
Rent income	5,000	5,200
Maintenance expenses	1,500	1,400
Discount rate	12%	11%
Selling price	600,000	620,000

Based on the above information, and rounding up calculated amounts to the nearest pound, which of the following statements is true? You can use Microsoft Excel to perform these calculations or perform them manually.

Select one:

a.

The NPV of Option A exceeds the NPV of Option B by 12,526.

b.

The NPV of Option B exceeds the NPV of Option A by 12,526.

c.

The NPV of Option B exceeds the NPV of Option A by 7,150.

d.

The NPV of Option A exceeds the NPV of Option B by 7,150.