Question
You are considering whether or not to replace the HVAC system in your home. Your existing furnace and AC unit are very reliable, but at
You are considering whether or not to replace the HVAC system in your home. Your existing furnace and AC unit are very reliable, but at the same time quite inefficient. It will cost you $7,000 today to replace the system, but you will be able to save $130 a month in energy costs. Both the existing and the new system are expected to last 10 years (120 months). Assume your personal discount rate is 8% a year with monthly compounding. Find the sum of the PVs of the monthly energy costs savings over the projected lifespan of the system (this does NOT include the initial cost of the new HVAC system). Assume the savings are realized at the end of each month. Express your answer in dollars and cents, but do not include the $ sign.
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