What would be the value at eight year mark for new system

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Reference no: EM132020790

The initial investment for the construction of a heating system is $1,000,000, this will take a year to be ready to operate, while the system is being built the old one needs to be kept working, the annual operating cost of this old system is $150,000. If the implementation of the new system is sucssesful it would save you $100,000 per year starting the second year.

For this analysis consider a period of 8 years since that is the remaining service life of the old system.

Interest rate is 3.5% compounded annualy.

What would be the value at the 8 year mark for the new system.

Reference no: EM132020790

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