You own a rental building in the city and are interested in replacing the heating system. You

Question:

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 heating system, which will cost $12,000 to install and $500 a 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 a year to run and will last 20 years.
c. An oil heating system, which will cost $3,500 to install and $1,200 a year to run and will last 15 years.
If your is 10%, which of these three options is best for you?
Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...