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 twenty years. c. An oil heating system, which will cost $3,500 to install and $1,200 a year to run and will last fifteen years. If your opportunity cost is 10 percent, which of these three options is best for you?
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 twenty years. c. An oil heating system, which will cost $3,500 to install and $1,200 a year to run and will last fifteen years. If your opportunity cost is 10 percent, which of these three options is best for you?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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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 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 twenty years. c. An oil heating system, which will cost $3,500 to install and $1,200 a year to run and will last fifteen years. If your
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