Annual savings after installation of natural gas furnace = 2000 - 1200 = 800
Initial cost = 6000
MARR = 8%
Let the payback be n yrs
6000 = 800 * (P/A, 8%,n)
(P/A, 8%,n) = 6000 / 800 = 7.5
((1 + 0.08)^n-1)/(0.08 * (1 + 0.08)^n) = 7.5
((1.08)^n-1)/(0.08 * (1.08)^n) = 7.5
((1.08)^n-1) = 7.5 * (0.08 * (1.08)^n)
((1.08)^n-1) = 0.6 * (1.08)^n
(1.08)^n = 1 / (1 - 0.6) = 1 / 0.4 = 2.5
n = log 2.5 / log 1.08 = 11.91 yrs
Payback period = 12 yrs (option c)
A 2,500 square foot house in New Jersey costs $2,000 each winter to heat with its...
A 2 comma 5002,500 square foot house in New Jersey costs $1 comma 8001,800 each winter to heat with its existing oil-burning furnace. For an investment of $5 comma 5005,500, a natural gas furnace can be installed, and the winter heating bill is estimated to be $1 comma 0001,000. If the homeowner's MARR is 66% per year, what is the discounted payback period of this proposed investment? (please show work in excel) A 2,500 square foot house in New Jersey...