Question

How much can Azco Autosystems, Inc., afford to spend on an energy management system if the software will save the company $21,300 per year for the next 5 years

Answer 1

The amount that that  Azco Autosystems, Inc.,  can afford to spend on an energy management system is $80,744.

Present value

Using this formula

Present Value = A(P/A, 10%, 5)

Where:

A=$21,300

(P/A, 10%, 5)=3.79079

Let plug in the formula

Present Value = 21,300 (P/A, 10%,5)

Present Value = 21,300 (3.79079)

Present Value =80,743.8

Present Value = $80,744 (Approximately)

Inconclusion the amount that that  Azco Autosystems, Inc.,  can afford to spend on an energy management system is $80,744.

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