What is salvage value for each is estimated cost of the land

Reference no: EM13214387

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.

a) Construct a choice table for interest rates from 0%-100%

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

Reference no: EM13214387

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