Question
A property owner is considering installing electric valves with automatic timers on their sprinkler systems. They estimate needing 45 valves and timers costing $65 for
A property owner is considering installing electric valves with automatic timers on their sprinkler systems. They estimate needing 45 valves and timers costing $65 for each set. Initial installation is estimated at $2,000. At the present time, four employees maintain the lawns, each paid $8,000 per year. They spend about 25% of their time watering. The cost of water is $1,200 annually. It is estimated the new system will reduce labor costs for watering by 80% and save 35% in water applied.Maintenance on the new system is estimated at $250 per year. Assuming a life of 8 years and a discount rate of 6%, should the owners install the system?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To determine if the property owner should install the new sprinkler system we need to evaluate the financial benefits by calculating the net present v...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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