son from Superfiber Insulation, Inc., has told you on of $20000 worth of Superfiber now. If the cos wwner plans to keep the present building for 12 end installing the insulation now given that the i 1053.55

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
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"The heat loss through the exterior walls of a certain poultry processing plant is estimated to cost the owner $4000 next year. A
salesperson from Superfiber Insulation, Ic., has told you, the plant engineer, that he can reduce the heat loss by 70% with the
installation of $20000 worth of Superfiber now. If the cost of heat loss rises by $30 per year (uniform gradient) after the next year
and the owner plans to keep the present building for 12 more years, what is the present worth of the savings? Would you
recommend installing the insulation now given that the interest rate of 6.2% year?"
(A) 24053.55
B 298048.78
266272.36
284131.78
E) 181022.9
Transcribed Image Text:"The heat loss through the exterior walls of a certain poultry processing plant is estimated to cost the owner $4000 next year. A salesperson from Superfiber Insulation, Ic., has told you, the plant engineer, that he can reduce the heat loss by 70% with the installation of $20000 worth of Superfiber now. If the cost of heat loss rises by $30 per year (uniform gradient) after the next year and the owner plans to keep the present building for 12 more years, what is the present worth of the savings? Would you recommend installing the insulation now given that the interest rate of 6.2% year?" (A) 24053.55 B 298048.78 266272.36 284131.78 E) 181022.9
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