A building manager needs to replace an air condenser and is considering two models. One of the models is more energy efficient and is expected to yield savings of around $110 per year over the next three years but it costs $349 more. If the firm uses an opportunity cost of 12% for investment decisions. What is the NPV of buying the more energy efficient model (rounded to the nearest dollar)?

A building manager needs to replace an air condenser and is considering two models. One of the models is more energy efficient and is expected to yield savings of around $110 per year over the next three years but it costs $349 more. If the firm uses an opportunity cost of 12% for investment decisions. What is the NPV of buying the more energy efficient model (rounded to the nearest dollar)?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

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