An oil company plans to purchase a piece of vacant land on the corner of two busy streets for $70,000. On properties of this type, the company installs businesses of four different types.
In each case, the estimated useful life of the improvements is 15 years. The salvage value for each is estimated to be the $70,000 cost of the land. The net annual income, after paying all operating expenses, is projected as follows:
(a) Construct a choice table for interest rates from 0% to 100%.
(b) If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected