A retail outlet is being designed in a strip mall in Nebraska. For this outlet, the installed fiberglass insulation to protect against heat loss in the winter and heat gain in the summer will cost an estimated $90,000. The annual savings in energy due to the insulation will be $20,000 at EOY one in the 9-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?

A retail outlet is being designed in a strip mall in Nebraska. For this outlet, the installed fiberglass insulation to protect against heat loss in the winter and heat gain in the summer will cost an estimated $90,000. The annual savings in energy due to the insulation will be $20,000 at EOY one in the 9-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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