Question

The yearly Avrage

4. An old furnace cost $850 per year to run. A new one costs $2,500 to buy and will save 34% annually in
energy costs to run it. In how many years will it pay for itself?

Answer 1

9 years

Explanation:
To determine the number of years it will take for the new furnace to pay for itself, we need to compare the cost of running the old furnace for that period with the cost of buying and operating the new furnace during the same time.

Let's calculate the cost of running the old furnace for one year:

Old furnace cost per year = $850

Now, let's calculate the savings in energy costs for the new furnace:

Savings in energy costs per year = 34% of $850

= 0.34 * $850

= $289

The total cost of buying and operating the new furnace for one year is:

New furnace cost per year = Cost of buying the new furnace + Savings in energy costs per year

= $2,500 + $289

= $2,789

To find the number of years it will take for the new furnace to pay for itself, we divide the cost of the new furnace by the annual savings:

Number of years to pay for itself = Cost of buying the new furnace / Annual savings

= $2,500 / $289

≈ 8.65

Since we cannot have a fraction of a year, we can round up to the nearest whole number. Therefore, it will take approximately 9 years for the new furnace to pay for itself.