If you insulate your office for 10000 you will save 1000 a y

If you insulate your office for $10,000, you will save $1,000 a year in heating expenses. These savings will last forever. a. What is the NPV of the investment when the cost of capital is 8%? 10%? b. What is the IRR of the investment? c. What is the payback period on this investment?

Solution

Given

Instulate office=$10,000

Saving for a year=$1,000