A rural utility company provides standby power to pumping stations using diesel-

Question

A rural utility company provides standby power to pumping stations using diesel-powered generators. an alternative has arisen whereby the utility could use a combination of wind and solar power generators, but it will be a few years before the energy system will be available. the utility estimates that the new system will result in savings of $15,000 per a year for 3 years starting 2 years from now, and $25,000 per a year for 4 more years after that (i.e. through year 8). at an interest rate of 8% per year, determine the equivalent annual worth (years 1-8) of the projected savings

Explanation / Answer

years after that. At an interest rate of 8% per year, what is the equivalent annual worth (years 1-8) of the projected savings. Year Cash Flow Discounting Factor at 8% Discounted value 1 $- 0.926 $- 2 $15,000.00 0.8

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