Question

Would love a hand on how I work this one out :)

You own a rental building and are interested in replacing the heating system. You are faced with the following alternatives, each of which is equally effective in heating: The opportunity cost is 10%^

a) A solar heating system, which will cost $12,000 to install and $500 a year to run and will last forever.

b) A gas heating system, which will cost $5,000 to install and $1,000 a year to run and will last 20 years.

c) An oil heating system, which will cost $3,500 to install and $1,200 a year to run and will last 15 years.