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    Net Present Value ,perpetual savings

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    Category: Economics
    Subject: Net Present Value
    Details: It costs $2600 to insulate a factory. Nest year, the fuel savings will be $220. EAch year after this, the cost of fuel is expected to rise by the rate g. If the discount rate is 12%, what rate of growth in fuel costs justifies going ahead with the insulation plan? (Hint: careul. Make sure that the rate of growth and the discount rate are aligned in terms of periodss.)

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    This is case of perpetual savings from insulation of the factory. ...

    Solution Summary

    This solution helps student in calculating rate of growth in fuel costs that justifies going ahead with the insulation plan.