A medium sized office building is considering upgrading its HVAC system. It determines that the cost of the upgrade would be $85,000. It assumes a planning horizon of 6 years and a MARR of 10%. At the end of the planning horizon, the system will have a salvage value of $15,000. However, it is unsure of what the energy savings will be due to the upgrade; it estimates that the new HVAC system will save $15,000; $20,000; or $25,000. Compute the present worth in each case, and determine the minimum savings required to justify the upgrade of the HVAC unit. Click here to access the TVM Factor Table calculator.
A medium sized office building is considering upgrading its HVAC system. It determines that the cost of the upgrade would be $85,000. It assumes a planning horizon of 6 years and a MARR of 10%. At the end of the planning horizon, the system will have a salvage value of $15,000. However, it is unsure of what the energy savings will be due to the upgrade; it estimates that the new HVAC system will save $15,000; $20,000; or $25,000. Compute the present worth in each case, and determine the minimum savings required to justify the upgrade of the HVAC unit. Click here to access the TVM Factor Table calculator.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
M11.
Transcribed Image Text:A medium sized office building is considering upgrading its HVAC system. It determines that the cost
of the upgrade would be $85,000. It assumes a planning horizon of 6 years and a MARR of 10%. At
the end of the planning horizon, the system will have a salvage value of $15,000. However, it is
unsure of what the energy savings will be due to the upgrade; it estimates that the new HVAC system
will save $15,000; $20,000; or $25,000. Compute the present worth in each case, and determine the
minimum savings required to justify the upgrade of the HVAC unit.
Click here to access the TVM Factor Table calculator.
If A = $15,000, PW=
If A = $20,000, PW =
If A = $25,000, PW =
$
$
Minimum annual savings required: $
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