Present Value Assignment | Homework For You

You own a house that has a baseboard electric heating system. The system is rather simple and will last another 20 years. Unfortunately, electric heat is very expensive. You are considering replacing the current system with a more efficient heat pump. The annual heating bill is currently $2,700 and the new system will cut the annual heating cost to $1,000. The new system costs $10,000, will last 20 years, and the appropriate interest rate is 6 percent
What is the present value of heat pump installation? Round your answer to the nearest whole number and no commas.
Hint: Subtract the cost of the system from the present value of the annual savings. Answer: Get Finance homework help today