Question: Mr. Daniel Colbert decides to install a fuel storage system for his farm that will save him an estimated 6.5 cents/gallon on his fuel cost.

Mr. Daniel Colbert decides to install a fuel storage system for his farm that will save him an estimated 6.5 cents/gallon on his fuel cost. He uses an estimated 20,000 gallons/year on his farm. Initial cost of the system is $10,000 and the annual maintenance cost is $250. After a period of 10 years the estimated salvage is $3,000. If money is worth 12%, is it a wise investment?

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