The owner of a corner lot wants to find a use that will yield a desireable return on his investment. If the owner wants a minimum attractive rate of return on his investment of 15%, which of the two alternatives would you recommend? Both alternatives have a 20 year life and no salvage value. Also, find the incremental rate.
A) Build fast food restaurant (first cost $800,000, Annual property taxes $30,000, Annual net income $150,000)
B) Build gas station (First cost $1,200,000, Annual property taxes $50,000, Annual net income $200,000)