Question: You are considering installing an energy-efficient central heating system in your firms warehouse. The installation will cost $12,000, and you estimate total savings of $3,000

You are considering installing an energy-efficient central heating system in your firm’s warehouse. The installation will cost $12,000, and you estimate total savings of $3,000 per year. The heating system will depreciate evenly over the next five years, at which point it must be replaced. The cost of capital is 8 percent. What do the NPV and EVA rules indicate about whether or not you should install the heating system?

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