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 opportunity cost is 10%, which of these three options is best for you?


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  • CreatedApril 15, 2015
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