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

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

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