Para Co is reviewing the following data relating to an energy saving investment proposal Cost $50,000 Residual value at the end of 5 years 10,000 Present value of an annuity of 1 at 12 for 5 years 3 60 Present value of 1 due in 5 years at 12 0 57 What would be the annual savings needed to make the ...

Residual value at end of year 5 10000 Cost 50000 The annual savings ...

Para Co. is reviewing the following data relating to an energy saving investment proposal: Cost $50,000 Residual

Question:

Para Co. is reviewing the following data relating to an energy saving investment proposal:
Cost $50,000
Residual value at the end of 5 years 10,000
Present value of an of 1 at 12% for 5 years 3.60
Present value of 1 due in 5 years at 12% 0.57
What would be the annual savings needed to make the investment realize a 12% yield?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...