You have been asked to select a new piece of equipment for your lab. Option 1 will produce cost savings of $5,000 per year for 4 years and Option 2 will generate cost savings of $4,000 per year for 5 years. Assume an interest rate of 10% compounded annually. What do you recommend?

Electricity for Refrigeration, Heating, and Air Conditioning (MindTap Course List)
10th Edition
ISBN:9781337399128
Author:Russell E. Smith
Publisher:Russell E. Smith
Chapter17: Commercial And Industrial Air-conditioning Control Systems
Section: Chapter Questions
Problem 6RQ
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You have been asked to select a new piece of equipment for your lab. Option 1 will produce cost savings of $5,000 per year for 4 years and Option 2 will generate cost savings of $4,000 per year for 5 years. Assume an interest rate of 10% compounded annually. What do you recommend?

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