om Superfiber Insulation, Inc., has told you, $15000 worth of Superfiber now. If the cost plans to keep the present building for 10 n stalling the insulation now given that the in .02

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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"The heat loss through the exterior walls of a certain poultry processing plant is estimated to cost the owner $2000 next year. A
salesperson from Superfiber Insulation, Ic., has told you, the plant engineer, that he can reduce the heat loss by 60% with the
installation of $15000 worth of Superfiber now. If the cost of heat loss rises by $150 per year (uniform gradient) after the next year
and the owner plans to keep the present building for 10 more years, what is the present worth of the savings? Would you
recommend installing the insulation now given that the interest rate of 9.06% year?"
A
224708.02
В
297366.2
186245.16
9866.14
E
205163.43
Transcribed Image Text:"The heat loss through the exterior walls of a certain poultry processing plant is estimated to cost the owner $2000 next year. A salesperson from Superfiber Insulation, Ic., has told you, the plant engineer, that he can reduce the heat loss by 60% with the installation of $15000 worth of Superfiber now. If the cost of heat loss rises by $150 per year (uniform gradient) after the next year and the owner plans to keep the present building for 10 more years, what is the present worth of the savings? Would you recommend installing the insulation now given that the interest rate of 9.06% year?" A 224708.02 В 297366.2 186245.16 9866.14 E 205163.43
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