You own a rental building in the city and are interested in replacing the heating system for the building. You are faced with the following alternatives:
a. A solar heating system, which will cost $ 12,000 to install, $ 500 a year to run, and will last forever. (Assume that your building will too.)
b. A gas-heating system, which will cost $ 5,000 to install, $ 1000 a year to run, and will last 20 years.
c. An oil-heating system, which will cost $ 3,500 to install, $ 1200 a year to run, and will last 15 years.
If your opportunity cost is 10%, which of these three options is best for you?
Please show work in excel