It is estimated that insulation of steam pipes in a factory, Ask an Expert

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It is estimated that insulation of steam pipes in a factory will reduce the fuel bill by as much as 20%. The cost of insulation is P9,000 and the annual cost of taxes and insurance is 5% of the initial cost. With the insulation, the annual fuel bill is P18,000. If the insulation is worthless after 6 years of use, and a minimum return of 12% is desired, would it be worthwhile to invest in the insulation? Use ERRR method. (Explicit Reinvestment Rate of Return)

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Financial Management, Finance

Category:- Financial Management
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