Question: You are in the market for a new refrigerator for
You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. The energy- efficient model sells for $ 700 and will save you $ 45 at the end of each of the next five years in electricity costs. The standard model has features similar to the energy- efficient model but provides no future saving in electricity costs. It is priced at only $ 500. Assuming your opportunity cost of funds is 6 percent, which refrigerator should you purchase?
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