Question

A small company heats its building and spends ​$8 comma 000 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 9​% per year starting one year from now​ (i.e., the first cash flow is ​$8 comma 720 at EOY​ one). Their maintenance on the gas furnace is ​$340 per​ year, and this expense is expected to increase by 12​% per year starting one year from now​ (i.e., the first cash flow for this expense is ​$380.80 at the EOY​ one). If the planning horizon is 13 ​years, what is the total annual equivalent expense for operating and maintaining the​ furnace? The interest rate is 15​% per year.

Answer 1

Annual equivalent expense= -14514.51

Step-by-step explanation:

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