You own a rental building in the city and are interested in replacing the heating system. You are faced with the following alternatives: a. A solar heating system, which will cost $12,000 to install and $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 and $1,000 a year to run and will last twenty years. c. An oil heating system, which will cost $3,500 to install and $1,200 a year to run and will last fifteen years. If your opportunity cost is 10 percent, which of these three options is best for you?

Kaleo has made up his mind—he wants a pool in the family’s backyard! He figures his kids and spouse will be thrilled. However, to cover the cost of the pool, they’ll have to pack up and live away from home for a few weeks during the summer to rent their home to vacationers. He crunched the numbers based on the following estimates. 1. Cost of pool/installation   $50,000 2. Life of the pool (no salvage value)   20 years 3. Annual net cash inflows from renting (net of cash expenses for renting and pool maintenance)   $6,500 4. Tax rate   23% 5. Average rate of return    8% Kaleo’s daughter, Sarah, found the above information written on a sheet of paper in his office, along with the following notes. “This is a no-brainer! We’ll recover the cost of this pool in just 7 years, even though we plan to live here until we’re old and gray, or at least as long as the pool hangs on. If we can rent our house out for just 3 weeks each year, it’ll be almost pure profit that we can put toward paying off…

Please solve it

Which of the following sets of Excel entries will correctly solve this problem: Jim paid $138,000 for an old house to renovate. He spent an average of $3,216 per quarter over the next two years as he readied the renovated house for sale. He wants to set the price of the house high enough so that he will earn an annual rate of return of 12% for his investment. Given that information, what price should Jim set on the house?