Eddies Precision Machine Shop is insured for $700,000. The present yearly insurance premium is $1.00 per $100 of coverage. A sprinkler system with an estimated life of 20 years and no salvage value can be installed for $75,000. Annual maintenance costs for the sprinkler system are $1,700. If the sprinkler system is installed, the system must be included in the shops value for insurance purposes, but the insurance premium will reduce to $0.40 per $100 of coverage. Eddie uses a MARR of 15%/year.

1) What is the annual worth of this investment?

2) Is the filter economically justified?