3. A firm paid $160,000 for a building site two years ago. It is now worth $180,000, and the firm's plans have changed so that no building is planned. The firm estimates that the land will be worth $240,000 in four years. If the firm's interest rate is 8%, what should it do? Should it sell the building now or in four years?

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Question 4 Part C: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and will always be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build and maintain the perpetual project? Interest rate is 6%. Costs Initial Cost Annual Operating & Maintenance Costs Year incurred Year O Major Maintenance Costs Amount $175,000 $10,000 $80,000 Question 4 Part C: What is the equation used to find the portion of the cost due to the Annual Cost (annual operating and maintenance costs)? Per year, forever First in year 5, then every 5 years forever P = 10,000/0.06 OP=10,000/0.06 +80,000(P/A, 0.06, 5) OP=10,000(P/F, 0.06, 1) + 80,000(P/A, 0.06, 10)

It refers to an annual decrease in value of physical properties with passage of time and use O A. Annuity O B. Depreciation O C. Stock O D. Bond