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YOU OWN A RENTAL BUILDING IN THE CITY AND ARE INTERESTED IN REPLACING THE HEATING SYSTEM. YOU ARE FACED WITH THE FOLLOWING ALTERNATIVES: A. A
YOU OWN A RENTAL BUILDING IN THE CITY AND ARE INTERESTED IN REPLACING THE HEATING SYSTEM. YOU ARE FACED WITH THE FOLLOWING ALTERNATIVES: A. A SOLAR SYSTEM, WHICH WILL COST 12,000 TO INSTALL AND 500 AT THE END OF EVERY YEAR TO RUN, AND WILL LAST FOREVER (ASSUME THAT YOUR BUILDING WILL TOO). B. A GAS-HEATING SYSTEM, WHICH WILL COST 5,000 TO INSTALL AND 1,000 AT THE END OF EVERY YEAR TO RUN, AND WILL LAST 20 YEARS. C. AN OIL-HEATING SYSTEM, WHICH WILL COST 3,500 TO INSTALL AND 1,200 AT THE END OF EVERY YEAR TO RUN, AND WILL LAST 15 YEARS. IF YOUR OPPORTUNITY COST OF CAPITAL (DISCOUNT RATE) IS 10%, DISCUSS WHICH OF THESE THREE OPTIONS IS BEST FOR YOU
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