A new funace costs $27,000 to install and will require ongoing maintenance expenditres of $1,500 per year. But, the furnace is far more efficient than the old furnace and will reduce fuel consumption on heating oil by 2,400 gallons per year. Heating il this year will cost $3.00/gallon. The price per gallon is expected to increase tor $0.50/gallon per year for the next 3 years and then, stabilize for the forseeable future. The furnace will last for 20 years, at which point it will need to be replaced and it will have no salvage value. The discount rate is 8%.
a) What is the payback period for the project? Round your answer to one decimal place.
b) What is the net present value of the project? Round your answer to the nearest whole dollar.
c) What is the IRR for the project. Round your answer to one decimal place.