A building owner is considering investing $6000 in insulating his roof. He calculates that he would save
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Question:
A building owner is considering investing $6000 in insulating his roof. He calculates that he would save $1500/year at current fuel prices, and that the roof insulation will last 10 years. His property tax rate is 8.3% and his combined federal and state income tax rate is 46%. He can earn 11% on his investments in his business. General inflation is 8%. Determine whether this is a good investment for the situations of:
a. Constant fuel prices over time.
b. Fuel prices that increase 12% annually.
c. Draw some conclusions from your result
Expert Answer:
Given the life span of roof insulating is 10 years as we know that the saving from the f... View the full answer
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