Question $1(1$ point$)$

Unequal lives $-$ costs. You are considering three methods for producing steam in your company's manufacturing plant. Revenues will be the same regardless of the method chosen. An oil boiler costs $$800000,$ and it has a useful life of six years. The costs of operating the oil boiler require after$-$tax cash flows of $$400000$ per year. A gas boiler costs $$240000,$ and it has a useful life of five years. The costs of operating the gas boiler require after$-$tax cash flows of $$410000$ per year. An electric boiler costs $$90000$ and it has a useful life of eight years. The costs of operating the electric boiler require after$-$tax cash flows of $$500000$ per year. If your company's weighted average cost of capital is $14\%$ per year, by which method should you generate steam? What is annualized cost of producing steam by the preferred method?

$1)$ $$526,718$

$$479,908$

$$519,401$

$$597,311$

$$605,726$