Anita Hayes, who owns a travel agency, bought an old house to use as her business office. She found that the ceiling was poorly insulated and that the heat loss could be cut significantly if 6 in. of foam insulation were installed. She estimated that, with the insulation, she could cut the heating bill by $160 per month and the air-conditioning cost by $100 per month. Assuming that the summer season is three months (June, July, and August) of the year and that the winter season is another three months (December, January, and February) of the year, what is the most that Anita can spend on insulation that would make installation worthwhile given that she expects to keep the property for five years? Assume that neither heating nor air conditioning would be required during the fall and spring seasons. If she decides to install the insulation, it will be done at the beginning of May. Anita's interest rate is 9% compounded monthly.
Anita Hayes, who owns a travel agency, bought an old house to use as her business office. She found that the ceiling was poorly insulated and that the heat loss could be cut significantly if 6 in. of foam insulation were installed. She estimated that, with the insulation, she could cut the heating bill by $160 per month and the air-conditioning cost by $100 per month. Assuming that the summer season is three months (June, July, and August) of the year and that the winter season is another three months (December, January, and February) of the year, what is the most that Anita can spend on insulation that would make installation worthwhile given that she expects to keep the property for five years? Assume that neither heating nor air conditioning would be required during the fall and spring seasons. If she decides to install the insulation, it will be done at the beginning of May. Anita's interest rate is 9% compounded monthly.
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