Question
A refurbished heating system is being considered for a small office building. The system can be purchased and installed for $200,000, and it will save
A refurbished heating system is being considered for a small office building. The system can be purchased and installed for $200,000, and it will save an estimated $70,000 per year in year-zero dollars that will increase with the general inflation rate of 5 % per year over a six-year period. The market value of the system will be $15,000 at the end of six years, and the market interest rate (im) is 20 % over this period. The company MARR is 18 % per year in its economic evaluations of refurbished systems. Determine the benefit-cost (B-C) ratio based on present worth for this project.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started