Question

A new oven will save $100 per year in electricity expense. How much can we afford to pay for this oven if it is expected to last 15 years

Answer 1

$557.55

Step-by-step explanation:

Missing word "The interest rate is 16​% per year"

Present Value of annuity of 1 = (1-(1+i)^-n)/i

Where, i = 16%, n=15

Present Value of annuity of 1 = (1-(1+0.16)^-15)/0.16

Present Value of annuity of 1 = 5.575456

Present Value of saving of electricity expense = Annual Saving * Present Value of annuity of 1 = $100.00 * 5.575456 = $557.55. So, the amount we can afford to pay is $557.55