4. A retail outlet is being designed in a mall in Baguio. For this outlet, the installed fiberglass insulation to protect against heat loss in the cold season and heat gain in the warmer season will cost an estimated P100,000. The annual savings in energy due to the insulation will be P18,000 at end of year one in the 10-year life of the outlet, and these savings will increase by 12% each year thereafter. If the annual interest rate is 15%, is the cost of the proposed amount of insulation justified?

4. A retail outlet is being designed in a mall in Baguio. For this outlet, the installed fiberglass insulation to protect against heat loss in the cold season and heat gain in the warmer season will cost an estimated P100,000. The annual savings in energy due to the insulation will be P18,000 at end of year one in the 10-year life of the outlet, and these savings will increase by 12% each year thereafter. If the annual interest rate is 15%, is the cost of the proposed amount of insulation justified?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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