Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 9

A facilities engineer is considering a $55,000 investment in an energy management system (EMS). The system is expected to save $14,000 annually in utility bills for N years. After TV years, the EMS will have a zero salvage value. In an after-tax analysis, what would N need to be in order for the investment to earn a 12% return Assume MACRS depreciation with a three-year class life and a 35% tax rate.