An oil company plans to purchase a piece of vacan1 land on the comer of two busy streets for…

An oil company plans to purchase a piece of vacan1 land on the comer of two busy streets for $70,000. On properties of this type, the company installs businesses of four different types. *Cost of improvements does not include the $70,000 cost of land. 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: Plan Net Annual Income A…………………$23,300 B………………….44,300 C………………….10,000 D…………………27,500 If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected? View Solution:
An oil company plans to purchase a piece of vacan1