Multiple Choice
(Net present value table required) Lester Manufacturing is conducting preliminary research into installing a geothermal heat pump to heat and cool its factories and offices. The initial cost of installing the new system is $275,000; however, Lester will save $55,000 annually on its heating and cooling costs. The system has an expected life of 15 years. What is the net present value (NPV) of the project, assuming a discount rate of 8%?
Present Value of $1
Present Value of Annuity of $1
A) $195,745
B) -$195,745
C) $470,745
D) $275,000
Correct Answer:
Verified
Correct Answer:
Verified
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