npv - MIT OpenCourseWare http/ocw.mit.edu ESD.71 1.146 3.56...

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MIT OpenCourseWare http://ocw.mit.edu ESD.71 / 1.146 / 3.56 / 16.861 Engineering Systems Analysis for Design Fall 2008 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms .
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Engineering Systems Analysis for Design ESD.71 NPV Assignment Context : You are a homeowner in Cambridge MA looking for a home furnace. You have to choose between a natural gas furnace and an oil burner. Part 1 – Determine your opportunity cost of capital (OCC) You now have $15,000 in cash. You wish to determine your discount rate for the heating device. You evaluate this rate based on other opportunities you would have to give up in order to buy the furnace. Looking at your financial records, the following investment opportunities are available: - Since you are an avid Patriots fan, you could buy two season tickets for $2,500 and get a 10% discount; - You could insulate your house for $10,000, which would save about $1,500/yr in fuel cost; - You could pay off your $50,000 30-year mortgage at a 8% yearly rate; and
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npv - MIT OpenCourseWare http/ocw.mit.edu ESD.71 1.146 3.56...

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