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A small company heats its building using a gas furnace. It expects to spend $9,240 on natural gas this first year. The cost of the
A small company heats its building using a gas furnace. It expects to spend $9,240 on natural gas this first year. The cost of the natural gas is expected to increase by 10% per year every subsequent year. There is also the maintenance cost on the gas furnace which is expected to be $896.00 in the first year and to increase by 12% per year every subsequent year. The planning horizon is 13 years and the company uses an annual interest rate of 15% for economic analysis of its investments. (a) The projected annual cost of natural gas in year 13 is $. (Round to nearest dollar) (b) The projected annual maintenance cost of the furnace in year 13 is $. (Round to nearest dollar) (c) The total present worth of operating and maintaining the furnace over the 13 years is $. (Round to nearest dollar)
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