We will install new HVAC equipment for you, absolutely free!! Just signa three-year contract to split 50/50 any savings the equipment generates on the use of equipment plus pay for a service contract for the equipment’s maintenance. We will takeout the loan for the equipment and installation and pay off the loan with our share of the savings. After three years, the equipment is yours! You’ll only be giving us some of the money you are paying to the power company for electricity. The service contract for the equipment is $15,000 per year, but think of your peace of mind!” Evaluate if this is a free lunch or if there is a catch somewhere based on other financial data available. What data would you need? What evaluation criteria would you choose?

We will install new HVAC equipment for you, absolutely free!! Just signa three-year contract to split 50/50 any savings the equipment generates on the use of equipment plus pay for a service contract for the equipment’s maintenance. We will takeout the loan for the equipment and installation and pay off the loan with our share of the savings. After three years, the equipment is yours! You’ll only be giving us some of the money you are paying to the power company for electricity. The service contract for the equipment is $15,000 per year, but think of your peace of mind!” Evaluate if this is a free lunch or if there is a catch somewhere based on other financial data available. What data would you need? What evaluation criteria would you choose?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 12P

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