Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner's insurance policy is $450 forthe coverage they need. Their insurance company offers a discount of 5 percent if they install dead-bolt locks on all exterior doors.The couple can also receive a discount of 2 percent if they install smoke detectors on each floor. They have contacted a locksmith,who will provide and install dead-bolt locks on the two exterior doors for $50 each. At the local hardware store, smoke detectors cost$7 each, and the new house has two floors. Dave and Ellen can install the smoke detectors themselves.a. Assuming their insurance rates remain the same, how many years will it take Dave and Ellen to earn back in discounts the cost ofthe dead-bolts? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Recovery periodb. How many years will it take Dave and Ellen to earn back in discounts the cost of the smoke detectors? (Do not round intermediatecalculations. Round your answer to 2 decimal places.)Recovery periodyearsO YesO Noyearsc. Would you recommend Dave and Ellen invest in the safety items if they plan to stay in the house for about five years?

The payback period assesses the duration needed to recoup the initial investment in a project or…

Answered: a. Assuming their insurance rates…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 37P

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Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner's insurance policy is $450 for the coverage they need. Their insurance company offers an annual discount of 5 percent if they install dead-bolt locks on all exterior doors. The couple can also receive an annual discount of 2 percent if they install smoke detectors on each floor. They have contacted a locksmith, who will provide and install dead-bolt locks on the two exterior doors for $60 each. At the local hardware store, smoke detectors cost $8 each, and the new house has two floors. Dave and Ellen can install the smoke detectors themselves. a. What discount will Dave and Ellen receive if they install the dead-bolt locks? (Round your answer to 2 decimal places.) Annual discount for dead-bolt locks b. What discount will Dave and Ellen receive if they install smoke detectors? Annual discount for smoke detectors
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