(Net Present Value Table Required)Lester Manufacturing Is Conducting Preliminary Research

question 121

Multiple Choice

(Net present value table required) Lester Manufacturing is conducting preliminary research into installing a geothermal heat pump to heat and cool its factories and offices. The initial cost of installing the new system is $275,000; however, Lester will save $55,000 annually on its heating and cooling costs. The system has an expected life of 15 years. What is the net present value (NPV) of the project, assuming a discount rate of 8%?
Present Value of $1
Present Value of Annuity of $1

• A)$195,745
• B)-$195,745
• C)$470,745
• D)$275,000

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Definitions:

Sublease

A transfer of less than all of a tenant’s interest in a leased property.

Assignee

In a contract, the party who receives the rights of another party (an assignor) to collect what was contractually agreed on in the original contract.

Assignor

In a contract, the party who transfers his or her rights to a contract to a third party (an assignee), giving the assignee the right to collect what was contractually agreed on in the original contract.

Needed Repairs

Needed repairs refer to maintenance or fixings that are necessary to restore or improve the condition of an item, property, or infrastructure to a satisfactory level.