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Question 3) A building owner is considering investing $6000 in insulating his roof. He calculates that he would save $1500/year at current fuel prices, and
Question 3) A building owner is considering investing $6000 in insulating his roof. He calculates that he would save $1500/year at current fuel prices, and that the roof insulation will last 10 years. His property tax rate is 8.3% and his combined federal and state income tax rate is 46%. He can earn 11% on his investments in his business. General inflation is 8%. Determine whether this is a good investment for the situations of: a. Constant fuel prices over time. b. Fuel prices that increase 12% annually. c. Draw some conclusions from your result Question 3) A building owner is considering investing $6000 in insulating his roof. He calculates that he would save $1500/year at current fuel prices, and that the roof insulation will last 10 years. His property tax rate is 8.3% and his combined federal and state income tax rate is 46%. He can earn 11% on his investments in his business. General inflation is 8%. Determine whether this is a good investment for the situations of: a. Constant fuel prices over time. b. Fuel prices that increase 12% annually. c. Draw some conclusions from your result
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