In an effort to be more environmentally conscious, a homeowner may upgrade a furnace that runs on fuel oil to a natural gas unit. The investment will be $2500 installed. The cost of the natural gas will average $60 per month over the year, instead of the $145 per month that the fuel oil costs. Assume energy costs increase 3% per year. If the interest rate is 9% per year, how long will it take to recover the initial investment?
In an effort to be more environmentally conscious, a homeowner may upgrade a furnace that runs on fuel oil to a natural gas unit. The investment will be $2500 installed. The cost of the natural gas will average $60 per month over the year, instead of the $145 per month that the fuel oil costs. Assume energy costs increase 3% per year. If the interest rate is 9% per year, how long will it take to recover the initial investment?
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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In an effort to be more environmentally conscious, a homeowner may upgrade a furnace that runs on fuel oil to a natural gas unit. The investment will be $2500 installed. The cost of the natural gas will average $60 per month over the year, instead of the $145 per month that the fuel oil costs. Assume energy costs increase 3% per year. If the interest rate is 9% per year, how long will it take to recover the initial investment?
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