5 Mr. Boisvert intends to convert the old foil heating system of his house and hesitates between natural gas and electricity. He expects the savings he will be sufficiently interesting to justify such an investment. Mr. Boisvert has a hot water heating system which, in the opinion of a specialist listing, is in excellent condition. he will only have to convert his current old boiler. The costs installation of the 2 systems envisaged are presented in Table 6.9. Table 6.9 (problem 2) Installation costs of electric heating systems tricity and natural gas Gaz naturel 1000 $ lectricit Bote d'entre 220 volts Chaudire Thermostat Pompe de circulation Chauffe-eau Main-d'oeuvre Total 900 200 1000 600 1500 5200 $ Entre du gaz Brleur Thermostat Pompe de circulation Chauffe-eau Main-d'oeuvre Total 900 $ 700 200 1000 500 700 4000 $ The electrical system does not require any regular maintenance; however, it is advisable to have it checked every year by a residential heating specialist, which costs $ 100. The natural gas system requires an annual maintenance plan at a cost of $ 200. The review of the most recent invoices paid by Mr. Boisvert as well as the study of the estimates provided by electric and gas heating contractors allow costs to be forecast annual maintenance and operation, presented in table 6.10. Table 6.10 (problem 2) Annual costs of maintaining and operating the systems heating systems with oil, electricity and natural gas Gaz naturel 200 $ Mazout 500 $ 2000 200 2700 $ Cots d'entretien Cots de chauffage Cots d'assurance Cots totaux lectricit 100 $ 1800 100 2000 $ 1400 100 1700 $ The interest rate on a loan required to finance this project is 12%. The duration of study chosen is 20 years. Ignore the residual value of the 3 heating systems. We ask: a) to evaluate, by the rate T; and by the value V, the profitability of a conversion of the system current heating to the electric system and to the natural gas system; b) make a recommendation to Mr. Boisvert