8-35) An oil company plans to purchase a piece of vacant land on the corner of t

ID: 1177846 • Letter: 8

Question

8-35) An oil company plans to purchase a piece of vacant land on the corner of two busy streets for $70,000. The cost of the types of businesses

Plan A) Cost: $75,000 Net Annual Income: $23,300

Plan B) Cost: $230,000 Net Annual Income: $44,300

Plan C) Cost: $30,000 Net Annual Income: $10,000

Plan D) Cost: $130,000 Net Annual Income: $27,500

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.

b) If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected?

C) Cost: $30,000 Net Annual Income: $10,000 Plan
b) If the oil company expects a 10% rate of return on its investments

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.