A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,500 square feet. The upgrade from R-11 to R-19 insulation costs $0.05 per square foot. The upgraded insulation is expected to save Ms. Dee Young approximately 420 kilowatt hours of energy usage per year. The planning horizon is 18 years and electricity costs $0.07/kWh. MAR is 10% per year. The future worth of R-19 insulation is $___?

A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,500 square feet. The upgrade from R-11 to R-19 insulation costs $0.05 per square foot. The upgraded insulation is expected to save Ms. Dee Young approximately 420 kilowatt hours of energy usage per year. The planning horizon is 18 years and electricity costs $0.07/kWh. MAR is 10% per year. The future worth of R-19 insulation is $___?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 3FPC

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A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,650 square feet. The upgrade from R-11 to R-19 insulation costs $0.10 per square foot. The upgraded insulation is expected to save Ms. Dee Young approximately 350 kilowatt hours of energy usage per year. The planning horizon is 19 years and electricity costs $0.07/kWh. MARR is 12% per year. The future worth of R-19 insulation is $
A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,600 square feet. The upgrade from R-11 to R-19 insulation costs $0.10 per square foot. The upgraded insulation is expected to save Ms. Dee Young approximately 400 kilowatt hours of energy usage per year. The planning horizon is 23 years and electricity costs $0.09/kWh. MARR is 10% per year. Part a Based on a future worth analysis, is the upgrade to R-19 insulation economically justified? Click here to access the TVM Factor Table Calculator. The future worth of R-19 insulation is $ Carry all interim calculations to 5 decimal places and then round your final answer to 2 decimal places. The tolerance is ±0.15. R-19 insulation ✓attractive.
You must decide whether to buy, build or lease a building for your business needs over the next 10 years. If you decide to build, you must determine if it is better to buy an existing building and modify it or buy land and build one to match your needs. Leasing an appropriate building will cost $10,000 per month with an annual increase of 3% per year and will require some retrofitting to suit your needs ($700,000). Empty land will cost $2,500,000 and the construction of a new building would be $3,000,000. You can buy an existing building for $2,500,000 but you will have to modify it to your needs at a cost of $1,200,000. However, the building itself is quite old and will be at the end of its useful life when the ten years are up. You estimate that the land alone is worth $2,000,000. There is a municipal election scheduled in the next months. The frontrunner, who has an estimated 70% chance of winning, is prioritizing core services and the environment. If they win, there is a 65% chance…
Brooke is evaluating two alternatives for improving the exterior appearance of her Victorian-style house that she is remodeling inside. She plans to keep this as her home for 20 more years. The house can be completely painted at a cost of $16,000. The paint is expected to remain attractive for 5 years, at which time repainting will be necessary. Every time the building is repainted (i.e., in years 5, 10, and 15), the cost will increase by 20% over the previous time. As an alternative, the exterior can be covered with a vintage-appearing vinyl-coated siding now and again 10 years from now at a cost 25% greater than the present cost of the siding. At a MARR of 10% per year, what is the maximum amount that Brooke should spend now on the siding alternative so that the two alternatives will just break even? Solve using factors. The maximum amount that Brooke should spend now on the siding alternative is $
The Rite family wishes to insulate the attic of their home to prevent heat loss. They are considering R-11 and R-19 insulation. They can install R-11 for $1,600 and R-19 for $2,400. They expect to save $125 per year in heating and cooling expenses if R-11 is installed. How much extra must they save in utility expenses per year in order to justify the R-19 insulation if they expect to recover the extra cost in 6 years at an interest rate of 6% per year? The extra savings from the utility expenses per year in order to justify the R-19 insulation must be $( per year.
Brooke is evaluating two alternatives for improving the exterior appearance of her Victorian-style house that she is remodeling inside. She plans to keep this as her home for 20 more years. The house can be completely painted at a cost of $16,000. The paint is expected to remain attractive for 5 years, at which time repainting will be necessary. Every time the building is repainted (i.e., in years 5, 10, and 15), the cost will increase by 20% over the previous time. As an alternative, the exterior can be covered with a vintage-appearing vinyl-coated siding now and again 10 years from now at a cost 25% greater than the present cost of the siding. At a MARR of 10% per year, what is the maximum amount that Brooke should spend now on the siding alternative so that the two alternatives will just break even? Solve using factors. The maximum amount that Brooke should spend now on the siding alternative is $ . Note:- Do not provide handwritten solution. Maintain accuracy and quality in…
In five years, Kent Duncan will retire. He is exploring the possibility of opening a self-service car wash. The car wash could be managed in the free time he has available from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan has determined the following: • A building in which a car wash could be installed is available under a five-year lease at a cost of $3,300 per month. • Purchase and installation costs of equipment would total $126,000. In five years the equipment could be sold for about 10% of its original cost. • An investment of an additional $9,500 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After five years, this working capital would be released for investment elsewhere. • Both a wash and a vacuum service would be offered with a wash costing $1.53 and the vacuum costing $0.85 per use. • The only variable costs associated with the operation would be 7.5 cents per wash…
Julie is considering installing solar photovoltaic panels on the roof of her house. Her monthly electricity bills currently average $86. The cost of installing a photovoltaic system is $18,000; however, she expects a 50% reduction in this cost due to tax credits and local rebates. Assuming all of her electrical needs are met by the new system and neglecting possible revenue when the system puts electricity back into the grid, what is the approximate payback period for the photovoltaic system?
Mr. Nelson wants to purchase a 60-inch HD television set with all the bells and whistles so that he can watch the World Quidditch Championship occurring exactly one year from now. He has arranged a rain-check with his local tech-shop to have the television set delivered, installed, and paid for in one year's time, for a total installed cost of $10,000. Being a forward-thinking person, Mr. Nelson wants to save a certain amount in each of the next 12 months to pay for the television set. At the savings rate of 5% per annum compounded monthly, how much must Mr. Nelson save each month in order to pay for the television set in one year's time?
A retrofitted heating system is being considered for an office building. The system can be purchased and installed for $ (501,000), and it will save an estimated (101,000) kilowatt-hours (kWh) of electric power each year over a 6-year period. A kilowatt-hour of electricity costs $1.164. The market value (MV) of the system will be $ (8,100) at the end of six years, and the annual operating and maintenance expenses (O&M) for the system are $ (5,100). MARR is15% per year. (a) Use the conventional benefit-cost (B/C ratio) for Present Worth method to make a recommendation. (i) (ii) Compute the conventional B/C ratio. Round your answer to 2 decimal places. Should this system be purchased? Why? (b) Use the modified benefit-cost (B/C ratio) for Present Worth method to make a recommendation. (i) Compute the modified B/C ratio. Round your answer to 2 decimal places. Should this system be purchased? Why? (ii) (c) Assume that the electricity costs will increase at the inflation rate of 3% per…
Oliver Douglas decides to install a fuel storage system for his farm that will save him an estimated 6.5 cents/gallon on his fuel cost. Initial cost of the system is $10,000, and the annual maintenance is $25 the first year, increasing by $25 each year thereafter. After a period of 10 years the estimated salvage is $3000. If money is worth 12%, what is the breakeven quantity of fuel?
Gloria is planning on opening a cake shop. She has found a location that rents for $15,550 per year and it will cost her another $13,716 to furnish the shop and purchase all the necessary equipment. She plans on charging $20 for a cake and it will cost her $3 per cake for ingredients and $1.92 per cake for decorations and $1.59 per cake for the beautiful, colorful to-go boxes. What is the dollar breakeven point she will need to earn to cover her costs in the first year? Round to the nearest whole number.