Sassy Wild Company is considering three different options for space for their tattoo parlor. The options are as follows:
|Option 1||Option 2||Option 3|
|Annual Cash Flow||\$8,000.00||\$15,000.00||\$25,000.00|
Option 1 is to refurbish and remodel the current parlor space for \$50,000 with annual cash flows of \$8,000.
Option 2 is to purchase the neighboring store and remodel it to add more space and facilities for \$150,000, yielding \$15,000 per year.
Option 3 is to purchase a new building to change locations for \$250,000 for \$25,000 in cash flows per year.
If Sassy's hurdle rate is 6% and the cash flows are estimated to occur for 10 years, which option should the company choose using Net Present Value calculations?