Your company is environmentally conscious and is considering two heating options for a new research building. What you know about each option is below, and your company will use an annual interest rate (MARR) of 9% for this decision. Which is the lower cost option for the company?

Gas Heating Option: The initial equipment and installment of the natural gas system would cost $225,000 right now. The maintenance costs of the equipment are expected to be $1,000 per year, starting next year, for each of the next 11 years. The energy cost is expected to be $5,000 starting next year and is expected to rise by 4% per year for each of the next 11 years due to the price of natural gas increasing Geothermal Heating Option: Because of green energy incentives provided by the government, the geothermal equipment and installation are expected to cost only $205,000 right now, which is cheaper than the gas lines. There would be no energy cost with geothermal, but because this is a relatively newer technology the maintenance is expected to be $10,000 per year, staring next year, for each of the next 20 years