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1. An inline filter has an estimated life of 14 years. By adding a purifier to the filer, savings of $500 in annual operating costs can be obtained. Annual interest on capital is 7% (interest rate per year). Compute the approximate maximum expenditure justifiable for the purifier

Respuesta :

Answer:

$4,373

Explanation:

Data provided as per the question below

Estimated life = 14 years

Savings = $500

Interest rate per year = 7%

The calculation of a given question is shown below:-

Present value of saving = Saving × Present value annuity factor

= $500 × 8.4755

= $4,372.75

= $4,373

Therefore for calculating the present value of saving we simply multiply the savings with the present value of the annuity factor.

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