Question

The heat loss through the windows of a home is estimated to cost the homeowner $412 per year in wasted energy. Thermal windows will reduce heat loss by 93 percent and can be installed for $1,232. The windows will have no salvage value at the end of their estimated life of 8 years. Determine the net present equivalent value of the windows if the interest rate is 10 percent.

Answer 1

$878.17

Step-by-step explanation:

Given:

Initial Investment (C0) = $1232

Cash flow (C1 to C8) = $412 (For 8 year) per year

Interest rate = 10%,

Number of periods (nper) = 8 years

Computation:

In excel,Using Net Present Value formula

NPV(10%;-1232;412;412;412;412;412;412;412;412)

NPV = $878.17

So Net Present Value of window is $878.17