Question
Jenny Walters, who owns a real estate agency, bought an old house to use as her business office. She found that the ceiling was poorly
Jenny Walters, who owns a real estate agency, bought an old house to use as her business office. She found that the ceiling was poorly insulated and that the heat loss could be cut significantly if six inches of foam insulation were installed. She estimated that with the insulation, she could cut the heating bill by $80 per month and the air-conditioning cost by $70 per month. Assuming that the summer season is three months(June, July, and August) of the year and that the winter season is another three months (December, January, and February) of the year, how much can Jenny spend on insulation if she expects to keep the property for five years? Assume that neither heating nor air-conditioning would be required during the fall and spring seasons. If she decides to install the insulation, it will be done at the beginning of May. Jenny's interest rate is 6% compounded monthly.
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