Minimum attractive rate of return

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Reference no: EM13994902

An energy efficient pump is proposed by a vendor. The pump will cost $45,000 installed, and will require $2,000 worth of maintenance each year for its life of 15 years. Energy costs will be $6,000 per year. A standard pump will cost $25,000 and will require $1500 worth of maintenance each year. Its energy costs will be $10,000 per year. If your company uses a MARR (Minimum Attractive Rate of Return) of 10%, would you invest in the energy efficient pump?

Reference no: EM13994902

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