a/You propose to replace winc nergy savings are required to off 10 vears and lifet

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
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5/ a/ You propose to replace windows to save energy. With a discount rate of 6%, what yearly
energy savings are required to offset the $25,000 project cost? Consider an investment period
of 10 years, and a lifetime of the windows of 30 years
b/ Assume that the windows save the amount of energy calculated in 5/a. If the windows
would have needed to be replaced anyways at a cost of $20,000 for standard efficiency
windows, what is the ROI and Payback for upgrading the windows to the energy efficient model
used in Sa/ for the upgrade cost of $5,000?
Transcribed Image Text:5/ a/ You propose to replace windows to save energy. With a discount rate of 6%, what yearly energy savings are required to offset the $25,000 project cost? Consider an investment period of 10 years, and a lifetime of the windows of 30 years b/ Assume that the windows save the amount of energy calculated in 5/a. If the windows would have needed to be replaced anyways at a cost of $20,000 for standard efficiency windows, what is the ROI and Payback for upgrading the windows to the energy efficient model used in Sa/ for the upgrade cost of $5,000?
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