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6-5. A company is comparing two heating options for a new research building with an 8% annual interest rate. Which option is more cost-effective? (6.4) Gas Heating: Initial cost of $425,000, $2,500 yearly maintenance for 20 years, and $8,000 yearly energy cost rising 5% annually. Geothermal Heating: Initial cost of $300,000, no energy cost, but $10,000 yearly maintenance for 20 years. k

6-5. A company is comparing two heating options for a new research building with an 8% annual interest rate. Which option is more cost-effective? (6.4) Gas Heating: Initial cost of $425,000, $2,500 yearly maintenance for 20 years, and $8,000 yearly energy cost rising 5% annually. Geothermal Heating: Initial cost of $300,000, no energy cost, but $10,000 yearly maintenance for 20 years. k

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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
Chapter1: Introduction And Goals Of The Firm
Section: Chapter Questions
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6-5. A company is comparing two heating options for a new research building with an 8% annual interest rate. Which option is more cost-effective? (6.4) Gas Heating: Initial cost of $425,000, $2,500 yearly maintenance for 20 years, and $8,000 yearly energy cost rising 5% annually. Geothermal Heating: Initial cost of $300,000, no energy cost, but $10,000 yearly maintenance for 20 years. k
Transcribed Image Text:6-5. A company is comparing two heating options for a new research building with an 8% annual interest rate. Which option is more cost-effective? (6.4) Gas Heating: Initial cost of $425,000, $2,500 yearly maintenance for 20 years, and $8,000 yearly energy cost rising 5% annually. Geothermal Heating: Initial cost of $300,000, no energy cost, but $10,000 yearly maintenance for 20 years. k
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