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The engineering staff at the Sun Shipping Company has informed decision-makers that substantial money can be...

The engineering staff at the Sun Shipping Company has informed decision-makers that substantial money can be saved on the fleet's fuel bills if the ships' engines are adapted. Based on the cost of fuel, the engineers estimate that the firm will save $60,000 each year for the first 5 years and save $85,000 per year for the following five years. If these estimates are accurate, what would the company be willing to pay to adapt the engines? The company can earn 9% annually on its investments.

please solve using excel

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Answer #1

Company should be willing to pay a cost that is preferably less than or at least or equal to the present value of savings that it is expected to make due to the investment, to make it an accretive and attractive investment.

Answer: $448,259.62

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