7
12 – 7,697 (2,487) 5,211 2,816 9,097
13 – 8,005 (2,536) 5,469 2,807 11,904
14 – 8,325 (2,587) 5,738 2,798 14,703
15 – 8,658 (2,639) 6,019 2,789 17,491
Total discounted cash flow 17,491
Cash Flow Analysis for a $25,000 Feature, 15% Discount Rate
First cost 25,000 over and above base
Equipment life 15 years
Savings or (Costs) for Year Incurred Net Present Value
Year Instl. Energy Maint. Net annual Year Cumulative
0 (25,000) – – (25,000) (25,000) (25,000)
1 – 5,000 (2,000) 3,000 2,550 (22,450)
2 – 5,200 (2,040) 3,160 2,283 (20,167)
3 – 5,408 (2,081) 3,327 2,043 (18,124)
4 – 5,624 (2,122) 3,502 1,828 (16,296)
1.20 Assume the option in the prior exercise is installed in a building with 200
occupants, average personnel cost $60,000 per year. If the device interferes with
temperature control, resulting in 2% decrease in productivity, what would the
simple payback be?