An environmentally friendly 2,800-square-foot green home (99% air tight) costs about 8% more to construct than a same-sized conventional home. Most green homes can save 15% per year on energy expenses to heat and cool the living space. For a $250,000 conventional home with a heating and cooling bill of $3,000 per year, how much would have to be saved in energy expenses per year to justify this home (i.e., B–C ratio greater than or equal to one)? The discount rate is 10% per year, and the expected life of the home is 30 years.

An environmentally friendly 2,800-square-foot green home (99% air tight) costs about 8% more to construct than a same-sized conventional home. Most green homes can save 15% per year on energy expenses to heat and cool the living space. For a $250,000 conventional home with a heating and cooling bill of $3,000 per year, how much would have to be saved in energy expenses per year to justify this home (i.e., B–C ratio greater than or equal to one)? The discount rate is 10% per year, and the expected life of the home is 30 years.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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