Analyzing Loss Control Decisions (4 of 4) Example: Should company invest in a sprinkler system? 4 years of useful life, no salvage value Installation cost: $240,000 Maintenance cost: $3,000 per year Reduced insurance premiums: $63,000 per year Reduced uninsured losses: $80,000 per year Interest rate: 10% Tax rate: 40% Analyzing Loss Control Decisions (4 of 4) Example: Should company invest in a sprinkler system? 4 years of useful life, no salvage value Installation cost: $240,000 Maintenance cost: $3,000 per year Reduced insurance premiums: $63,000 per year Reduced uninsured losses: $80,000 per year Interest rate: 10% Tax rate: 40%