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You own a 120,000 SF warehouse facility and must update the building's HVAC system. After some initial research, you find a new system that will
You own a 120,000 SF warehouse facility and must update the building's HVAC system. After some initial research, you find a new system that will reduce your energy bills by $0.30/SF per year. The cost of installation is $0.85/SF. You assume that in five years, you will be able to sell your building for $65,000 more than you otherwise would have due to the increased value of the new HVAC system. Considering both the cost savings and the increased resale value at the end of the holding period, what is the net (after installation cost) increase in the present value of the building? (Use a discount rate of 9%). In other words, what is the net present value of installing this new system based on both your energy savings and sale premium
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