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A small heat pump costs $2,400 to purchase and install now. It has a projected...

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Accounting

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A small heat pump costs $2,400 to purchase and install now. It has a projected useful life of 18 years and will incur annual maintenance costs of $100 per year in real (year-zero) dollars over the useful life. The projected inflation rate for the maintenance costs is 4% per year. In addition, there is the cost of electricity for the heat pump which is $700 per year also in year-zero dollars and is subject to an annual inflation rate of 9%. The firm's MARR, based on the market interest rate, is 12% per year (im). No market value is expected from the heat pump at the end of the 18 years of service life. Calculate the PW of owning and operating this heat pump over its service life. Click the icon to view the interest and annuity table for discrete compounding when i=12% per year. The PW is $ (Report as a negative number to the nearest dollar.) More Info

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