A small company heats its building and spends $ 7 comma 800 7,800 per year on natural gas for this purpose. cost increases of natural gas are expected to be 9 9 % per year starting one year from
A small company heats its building and spends $ 7 comma 800 7,800 per year on natural gas for this purpose. cost increases of natural gas are expected to be 9 9% per year starting one year from now (i.e., the first cash flow is $ 8 comma 502 8,502 at eoy one). their maintenance on the gas furnace is $ 335 335 per year, and this expense is expected to increase by 12 12% per year starting one year from now (i.e., the first cash flow for this expense is $ 375.20 375.20 at the eoy one). if the planning horizon is 14 14 years, what is the total annual equivalent expense for operating and maintaining the furnace? the interest rate is 15 15% per year.
