04-FE008

The heat loss through the windows of a home is estimated to cost the homeowner $412 per year in wasted energy. Thermal windows will reduce heat loss by 93% and can be installed for $1,232. The windows will have no salvage value at the end of their estimated life of 8 years. Determine the net present equivalent value of the windows if the interest rate is 12%.

04.03-PR001

The Oklahoma City Zoo has proposed adding to their Web site a major segment providing a virtual tour of the grounds and animals, suitable for both routine enjoyment and educational purposes in class rooms. Survey data indicate that this will have either a neutral or positive effect upon actual zoo attendance. The Web site will be professionally done and have an initial cost of $325,000. Upkeep, refreshing the videos, and developing videos for scientific research and entertainment will cost another $80,000 per year. The zoo is expected to be in operation for an indefinite period; however, a study period of only 10 years for the Web site is to be assumed, with only a residual (salvage) value of $60,000 for the archival value being anticipated. Interest is 10%. An estimated 100,000 persons will visit the e-zoo in the first year, increasing by 30,000 each year, and they will receive, on the average, an additional $0.80 of benefit per visit when the new area is complete. On the basis of B/C analysis, should the Web site be supported for funding?