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 $300,000 and it has a useful life of six years. The costs of operating the oil boiler require after-tax cash flows of $250,000 per year. A gas boiler costs $200,000 and it has a useful life of five years. The costs of operating the gas boiler require after-tax cash flows of $350,000 per year. An electric boiler costs $150,000 and it has a useful life of eight years. The costs of operating the electric boiler require after-tax cash flows of $400,000 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?