A facilities engineer is considering a $55,000 investment in an energy management system (EMS). The system is

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A facilities engineer is considering a $55,000 investment in an energy management system (EMS). The system is expected to save $14,000 annually in utility bills for N years. After N years, the EMS will have a zero salvage value. In an after-tax analysis, what would N need to be in order for the investment to earn a 12% return? Assume MACRS depreciation with a three-year class life and a 35% tax rate. Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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