Problem $8-30$ Investment Criteria $($LO$1,$ LO$2,$ LO$4,$ LO$5)$

A new furnace for your small factory is belng installed right now, will cost $$46,000,$ and will be completed in one year. At that polnt, it will

require ongoing maintenance expenditures of $$4,000$ a year. But it is far more fuel$-$efficlent than your old furnace and will reduce your

consumption of heating oll by $4,300$ gallons per year. Heating oll this year costs $$3$ a gallon; the price per gallon is expected to increase

by $$0\mathrm{.}50$ a year for the next $3$ years and then to stablize for the foreseeable future. The furnace will last for $20$ years from inital use, at

which point it will need to be replaced and will have no salvage value. $($Specifically$,$ the firm pays for the furnace at time $0$ and then reaps

higher net cash flows from that investment at the end of years $1-20.)$ The discount rate is $10\%.$

a$.$ What is the net present value of the investment in the furnace?

Note: Do not round Intermedlate calculatlons. Round your answer to the nearest whole dollar.

b$.$ What Is the IRR?

Note: Do not round Intermedlate calculations. Enter your answer as a percent rounded to $2$ declmal places.

c$.$ What is the payback perlod?

d$.$ What is the equivalent annual cost of the furnace?

Note: Do not round Intermedlate calculatlons. Round your answer to $2$ decimal places.

e$.$ What is the equivalent annual savings derlved from the furnace?

Note: Do not round Intermedlate calculatlons. Round your answer to $2$ decimal places.

f$.$ Compare the PV of the difference between the equlvalent annual cost and savings to your answer to part $($a$).$ Are the two

measures the same or is one larger?