A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,500 square feet. The upgrade from R-11 to R-19 insulation costs $0.1 per square foot. The upgraded insulation is expected to save Ms. Dee Young approximately 400 kilowatt hours of energy usage per year. The planning horizon is 20 years and electricity costs $0.08/kWh. MARR is 10% per year.
A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,500 square feet. The upgrade from R-11 to R-19 insulation costs $0.1 per square foot. The upgraded insulation is expected to save Ms. Dee Young approximately 400 kilowatt hours of energy usage per year. The planning horizon is 20 years and electricity costs $0.08/kWh. MARR is 10% per year.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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what is the future worth of R-19
Please solve by hand or using formula table
Transcribed Image Text:A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,500 square feet. The upgrade from R-11 to R-19 insulation costs $0.10 per square foot. The upgraded insulation is expected to save Ms. Dee Young approximately 400 kilowatt-hours of energy usage per year. The planning horizon is 20 years and electricity costs $0.08/kWh. The Minimum Acceptable Rate of Return (MARR) is 10% per year.
Expert Solution
Step 1: Given the information:-
Insulated area = 1,500 square feet
Insulation costs =$0.10 per square foot
Savings due to upgraded insulation = 400 kilowatt hours of energy usage per year
Time= 20 years
Electricity costs =$0.08/kWh
MARR =10%
Required: Future worth of R-19 insulation
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